Pay expectations rising, but so are redundancies

Employers have reported a substantial increase in pay expectations for 2024 but simultaneously have forecast a growing number of redundancies.

A new report by AHRI research has revealed that Aussie workers’ hope for real wage growth in this financial year may come to fruition, as there has been a significant rise in employers’ pay expectations.

AHRIs Quarterly Work Outlook report shows that employers expect the mean basic pay increase to be 3.8 per cent in the 12 months to July 2025, which is an increase from the previously predicted 3 per cent.

With the Reserve Bank of Australia’s recent announcement that consumer price index (CPI) inflation will fall to 2.8 per cent by June 2025, it’s an exciting outlook for Aussie workers who are striving for stronger and sustained increases in wages.

However, the report, which surveyed 600-plus senior HR professionals and decision-makers, also discovered that while there has been an increase in the number of employers planning to increase wages, redundancies will also see an increase going into FY2024–25.

There were significant differences in redundancy intentions between sectors, with 60 per cent of the public sector employers anticipating job cuts in the September quarter, which is a stark increase from the June figures, sitting at 31 per cent.

Redundancy figures in the private sector have somewhat remained much of the same, idling at 21 per cent. Recruitment intentions were extremely high in the public sector, at 88 per cent, compared to the private sector at 62 per cent.

AHRI chief executive Sarah McCann-Bartlett said the figures could be more about restructuring than job cuts.

“This is potentially about the different skills that are needed as more organisations embrace digitisation, automation and AI in pursuit of higher productivity and growth. The redundancy figures could, therefore, be about restructuring and preparing for the future rather than cost savings,” said McCann-Bartlett.

“These incremental changes will have an ongoing impact on the composition of the workforce, including higher-quality jobs in Australian workplaces. Indeed, the survey data suggests that the net effect of this activity will be to increase employment levels, mirroring the trends in the official data.”

The need for organisations to upskill their workers is profound, according to McCann-Bartlett. As these changes around digitisation, automation and AI continue to be implemented in the workplace, the number of skilled workers with expertise in these areas may be minimal.

Therefore, ensuring that your employees are learning this needed skill set is crucial, as there may not be many on the labour market with said skills. It is, however, something that employees themselves should also be advocating for, as it may be imperative for their career progression.

“My message to employees is that they should be advocating for upskilling within their organisations, while jobseekers should be focused on acquiring in-demand skills,” said McCann-Bartlett.

The stress that these changes may have on HR teams across organisations cannot be undersold. As the moving parts continue, the job tasks under their umbrella expand, which is why McCann-Bartlett stressed the need for a systematic approach for HR teams in FY24–25.

“HR professionals are in an unusual situation where they are having to manage the 4Rs – managing recruitment, redundancies, retention and reorganisation at the same time. While this may seem paradoxical, it reflects the increasingly complex ways employers are changing the composition of their workforce through digitisation, automation and AI,” said McCann-Bartlett.

“To reap the productivity benefits of these changes to technology, HR professionals also need to adopt a systematic approach to consulting, involving and training across the entire workforce.”