Pay rates climb by 5% despite the slowdown

An economic slowdown isn’t doing much to reduce pay rates, with new research from consulting firm Mercer revealing salaries have risen 5% over the last year.

An economic slowdown isn’t doing much to reduce pay rates, with new research from consulting firm Mercer revealing salaries have risen 5% over the last year.

Mercer’s survey shows while companies are reducing spending in other areas, salaries for the same people in the same roles have increased over a period of four years.

Mercer performance and rewards leader David Abusah says that despite the slowdown, the 5% growth rate is actually higher than the 4.7% rate at this time last year and he expects salaries will continue to rise.

“Salary movements are forecast to rise again by 5% over the next 12 months; a sign that despite a slowing economy and lower business confidence, tight labour conditions still exist,” he says.

Construction and engineering have seen the highest increases at 8%, while energy and business sector salaries have seen a rise of 7.3% and 5.8% respectively.

Abusah also says the figures show businesses are well aware of the need for continued investment in keeping skilled workers employed. 65% of businesses also declared they will be investing more on career development for their employees over the next 12 months.

“Remuneration is only one part of the puzzle when competing for talent and the need to maintain a competitive and differentiated employment offer remains high,” he says.

“Now we’re at a point where we are not in a position to simply keep buying talent, hence we’re seeing a greater focus on companies building the capability of their people.”

The survey also finds salaries within the manufacturing industry are still growing at the national average of 5%, retail salaries are below the national average at 4.8%, while the insurance sector has only received 4.1% increases.

Abusah says employers will have to be flexible when dealing with salaries. “The major differences between this slowdown and those of the past is that employers are now dealing with a more complex workforce than ever before. The workforce… has diverse generational preferences, and requires greater flexibility.”

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