What remuneration may look like in 2025

In a period where pay increases and top-end salaries may not be applicable, a recent report has given us a glimpse at what remuneration may look like in 2025.

A report released by Mercer, Total Remuneration Survey – Australian Salary Outlook 2025, has given workers a glimpse of what remuneration may look like in the upcoming year. With economic uncertainty being a major factor, employers express less confidence in their hiring intentions, yet employees are more likely to stay put.

According to the report, upskilling and reskilling will continue to be a strategic priority for Australian organisations; therefore, a holistic approach to remuneration on the agenda should be a priority for the year ahead.

Remuneration trends in 2025:

1. The rise of skills-based pay models: Skills-based pay is gaining traction in the Asia-Pacific region, where 28 per cent of organisations said they have some form of skills-based rewards programs. A majority (84 per cent) of APAC organisations said they use skills-based pay approaches to help them attract and retain premium skills.
2. Greater focus on equity and inclusion: Employees have revealed the top two reasons they choose to stay with their current employer: job security and fair pay. Increased pay transparency – with pay secrecy clauses now banned from employment contracts, as well as more scrutiny on gender pay gaps – has pushed living wages, fair pay and fair opportunity into the spotlight. Organisations have begun conducting pay audits and market rate comparisons to address disparities. Many are also disclosing pay structures to build trust and accountability with employees.
3. Emphasis on total rewards: With limited pay growth, organisations respond to changing employee expectations by offering holistic benefits through total rewards packages to retain talent. Recognising that their employees may be under financial strain, many companies are stepping up, with close to one-third of organisations now offering financial wellness programs. And as employers strive to close skills gaps, 60 per cent of organisations now have learning and development programs available for all employees, up from 52 per cent in 2023.

With sentiment in the report being that employers seem to be shifting their focus from recruiting to employee retention, these holistic remuneration tactics may prove vital to retaining the same headcount as 2024, which 42 per cent of organisations wanted to achieve.

As employers enter 2025 with a non-monetary incentive mindset, it will be interesting to see how much this resonates with employees.