Wages set to lift in 2024

Great news for workers, as hopes of sustained wage growth have been boosted for 2024.

The latest survey from the Australian HR Institute has shown that employers expect that going into 2024, the mean basic income will have a sharp increase. With inflation easing, employers expect an increase (excluding bonuses) to 3.7 per cent in the 12 months to January 2025, a big difference from the 2.6 per cent previously predicted for the 12 months to October 2024.

With inflation being forecast to fall to 3.3 per cent by June, the survey data offers legitimate hope that workers will see a sustained increase in real wages this year.

Other findings from the report show that the labour market is cooling, with the Net Employment Intentions Index falling to +33, the lowest figure for net employment since the survey began in the June quarter of 2023 and well below the December 2023 quarter (+41).

Making up the index, 36 per cent of organisations plan to increase their employment levels, with just 3 per cent planning to reduce their workforce size. Recruitment difficulties are also beginning to recede, with only 38 per cent still experiencing these difficulties, down from 48 per cent in the previous quarter.

Australian HR Institute chief executive Sarah McCann-Bartlett said that softer labour market conditions usually lead to moderate wage increases; however, this situation is much more complex.

“Although recruitment difficulties have eased, many organisations are still having trouble both recruiting and retaining staff. A lack of quality in the labour supply and the high training and recruitment costs associated with replacing staff may, therefore, be putting upward pressure on wages in many Australian workplaces,” said Ms McCann-Bartlett

These higher wage expectations are being pushed by both the public (up 4 per cent) and the private sector (up 3.6 per cent), but it is important to note that a third of employers reported that they do not yet know the extent of these incoming wage changes at this state.

Ms McCann-Bartlett also stated that the weaker labour market conditions don’t appear to be leading to an increased rate of job cuts in the short term, with redundancy intentions falling from 31 per cent to 22 per cent in the past three months.

“Seventy per cent of employers told us they are adopting tactics to avoid or reduce redundancies, with the most popular options being raising prices (27 per cent), exercising greater control over non-staff operation costs (23 per cent) and reducing the use of non-permanent staff (21 per cent).

“This concerted effort to reduce redundancies might be because they want to preserve the skills and knowledge of their current workforce or because they are waiting for further information about the economic outlook before deciding to cut jobs,” said Ms McCann-Bartlett.

This is more good news as redundancies last year became a growing trend. Employees will be relieved to hear that employers are looking to avoid these tactics. As Ms McCann-Bartlett said, among those employers that are planning job losses, an average of 6 per cent of their workforce will be made redundant.

Other key findings in the report focus on other pressing concerns for employees:

• Measures to retain staff: The most popular measures to help retain staff are enhanced flexible working arrangements (37 per cent), increased learning and development opportunities (36 per cent), and improved support for employee wellbeing (35 per cent).
• Employee turnover: The 12-month average employee turnover rate to the end of December 2024 is 14 per cent, unchanged compared with the previous quarter. Turnover is higher in the public sector (18 per cent) than in the private sector (14 per cent).
• Recruitment channels: Employers say the most effective recruitment channels are online recruitment platforms (36 per cent), professional networking sites such as LinkedIn (30 per cent) and recruiters or recruitment consultants (25 per cent).
• Hiring: Overall, almost two-thirds (63 per cent) of employers actively exclude people with certain characteristics from the hiring process.