With interest rates and inflation still rising, Australian workers will likely need to factor higher living costs into their wage demands for 2024 if they haven’t already had a pay rise this year to avoid their wages being eroded by inflation. Now could be the best time to act before the new year starts.
With the official interest rate rising again in November, this will push up inflation, which is already sitting high. The annual inflation rate rose 5.4 per cent in the September 2023 quarter after hovering around 7 per cent for much of the year, data from the Australian Bureau of Statistics (ABS) reveal. New housing costs and rents were the main contributors to annual inflation, along with higher electricity and petrol prices. Housing costs (including rent and mortgage repayments) account for around one-quarter of all living costs as measured by the consumer price index (CPI), so higher interest rates inevitably mean higher inflation.
Given higher costs, many Australian workers will need to demand wage increases ahead of 2024 to counterbalance inflation’s corrosive effects. Many Australians have yet to have a wage rise this year; averaged across all sectors, wage growth is sitting at just 3.6 per cent in Australia, well below the inflation rate. With a national skills shortage in the labour market and the unemployment rate sitting at just 3.6 per cent, the time is ripe for employees to ask for more. If you have not been granted a wage rise this year through your good work, then ask for it. Many employers will be willing to renegotiate salary packages for 2024 to avoid the headache of having to replace workers in the tightest labour market in nearly 50 years.
Apart from asking employers for more money, workers may also request greater workplace flexibility or its maintenance. Many employers in the private sector are winding back work-from-home (WFH) policies. This may backfire and undermine loyalty from workers as it likely indicates a lack of trust by employers in their employees who are WFH. Winding back WFH also indicates a very questionable definition view of what “productivity” looks like, whereby “presenteeism” is gradually returning to the workplace, where being present matters more to employers than their employees’ productivity. In fact, many workers are more productive working from home without the distractions of the workplace. So, if you want to continue WFH in 2024, then you may need to ask for that, along with a pay rise.
Factors to consider in asking for a pay rise
With inflation still running hot, how and when you ask for it can make a big difference. Most importantly, have examples of your contributions and productivity ready to back your request. When it comes to getting a raise, your performance matters. Employees need to show their bosses that they are adding value to the organisation. Include any improvements in sales or profit to which you have contributed, so bring data to back up your arguments. The more you can prove your value to the organisation, the greater the chance that your request for a pay rise will be granted.
You should also research comparable salaries being paid for similar roles in the jobs market as an independent measure of your worth. If you are prepared to walk to greener pastures, then tell your employer exactly that. That may strike fear into their hearts because they know they may not be able to easily replace you. Older workers, or “Baby Boomers”, are leaving the job market, and there simply aren’t enough workers to replace them.
When you ask for a wage increase is also important. One of the biggest mistakes employees make is waiting until the new year to ask for a wage rise, figuring that January brings the best chance of getting more money. However, by the end of December, most companies’ payroll budgets are locked in for the new year. So, if you’re gearing up to ask for a pay raise, don’t wait: now is the time to strike before the year ends.
Kris Grant is the chief executive at ASPL Group.