Thinking about requesting a pay rise? Now could be a great time to ask, according to employment experts.
Job vacancies have soared and pay rates are rising due to the chronic labour shortage which has left workers and job candidates holding the “trump card” in pay negotiations.
One recruitment agent says right now employees are in a uniquely strong position to negotiate pay rises due to the ongoing demand for skilled workers.
However, this could change if the supply of labour increases when the borders reopen in October. The market could then shift from being a candidates market to a more even playing field, business leaders say.
The pressure to increase pay rates has seen the average salary in the Bay of Plenty hit a record high, according to new Trade Me job figures.
The region reached a record-high average salary of $64,413 for the quarter ending March 31.
Tauranga’s average salary was $61,183, up 6 per cent year-on-year and $59,707 in Rotorua, up 5 per cent year-on-year.
There are 1851 jobs listed in the Bay – a 21 per cent year-on-year increase. Of these, 384 jobs are listed in Rotorua and 1187 in Tauranga.
The largest rises in job listings were in customer service (up 92 per cent), education (up 53 per cent), and transport and logistics (up 50 per cent).
Trade Me Jobs sales director Matt Tolich said paying more was proving to be an effective way to attract talent in the increasingly competitive market.
“As the saying goes, money talks. Employers are clearly forking out more to lure and secure talent in the hot market.”
Personnel Resources / Temp Resources Ltd Rotorua manager Angelique Scott said salaries needed to reflect the rising cost of living and companies needed to ensure what they were offering was competitive.
“Candidates are requesting higher salaries than ever before… it will continue to be a candidate’s market for a little while now, but as the borders open up we may see a change in this.”
The recruitment company had been inundated with human resources roles and accountants were also in demand.
“We have a record number of vacancies that we are working on.
“We are noticing that temping is now extremely popular, as it is a good way to get a project completed within a certain timeframe.”
Scott said the number of people applying for roles had dropped and good candidates were snapped up quickly.
“We are finding that we are needing to be fairly creative with our advertising when it comes to sourcing candidates, down to offering chocolates to people who refer friends and families on to us.”
Tauranga recruitment agency The Staffroom Ltd director Jill Cachemaille said rising salaries meant employers would continually be forced to sharpen their pencils.
“Candidates are maximising every opportunity to negotiate higher salaries and I imagine this will continue whilst there is a shortage of choice.”
Cachemaille said there was ongoing demand for higher salaries and candidates were prepared to walk away from a job offer that does not meet their minimum benchmark.
“Candidates continue to hold the trump card with multiple offers on the table at any one time,” she said.
“Employers are learning through experience, they need to be realistic with their first offer and work quickly.”
Now was a good time to ask for a pay rise as employers were aware of the value of keeping staff, as well as the cost of losing someone and subsequently having to replace them, she said.
However, she warned that when the pendulum swung the other way and the market shifted, employers would remember those who were fair and reasonable in their requests and those who weren’t.
“The hardest roles to fill are always those that require a niche skillset simply due to the low number of people being skilled in those areas.”
Ryan + Alexander Recruitment Agency director Bernadette Ryan-Hopkins said the Bay continued to “boom” and see shortages across most sectors, particularly construction, agriculture, horticulture and engineering.
“We are hopeful that opening borders will see this stress soften…”
Ryan-Hopkins said Bay employers had been absorbing increases in salaries for a decade.
“Ten-dollar Tauranga no longer exists and good employers recognise this.
“The Bay can no longer rely on the strategy of ‘we have great beaches and more sun so we can pay you less’ and most good employers get it.”
Talent ID Recruitment director Kellie Hamlett said it was a candidate-driven market and employers were having to pay more to attract top talent or give staff pay rises in order to retain them.
But Hamlett said it wasn’t just about nailing down your employer for more money just because average salaries had hit record highs.
“Employers are hurting in a lot of different ways too.”
Holland Beckett Law partner Christie McGregor said timing was key when asking for a pay rise.
“The best times to request a pay rise include when there is a change to an employee’s role or a promotion, when a qualification is obtained, at a performance review, or on the anniversary of commencement of employment.”
The most obvious time of course is as part of any pay review cycle for the employer, she said.
“In terms of justification, now may be a good time to ask for a pay rise because it is the end of the financial year for many businesses and many employers will review pay as part of their planning for the new year.
“In addition, the CPI inflation rate has increased (in other words, living costs have gone up), the minimum wage has increased and there is increased competition in the market.
“We may well also see pressure on employers to increase pay due to an increase in resignations as a result of loosening travel restrictions.”
Tauranga Business Chamber chief executive Matt Cowley said overall New Zealand’s closed borders had resulted in a skilled labour shortage and a massive spike in vacancies and wage inflation.
Cowley said record-high average salaries set people’s expectations to either ask for more money or look around for other jobs.
The construction, primary sector, manufacturing and IT industries were all facing a “mass resignation” partly due to higher salary offers and because they were overworked to cover staff shortages.
“A lot of middle managers are facing the day-to-day pressure of managing supply chain disruptions, staff cover during Omicron, and rising, unbudgeted costs from suppliers.”
Many returning ex-pats will either want to be an employee or become business owners, he said.
“There will be a net impact with Kiwis coming home and those choosing to leave.
“The Government’s immigration settings limit skilled migrant workers to pay levels of higher than $27 per hour.
“Many industries will still be short-staffed until temporary workers – like backpackers – (return) to fill lower-paid roles that Kiwis do not want to do. Hospitality is screaming out for both front of house and kitchen staff.”
Nigel Tutt, chief executive of Western Bay of Plenty economic development agency Priority One, said the Bay had one of the most buoyant economies but it was feeling the impact of the shortage more than most regions.
“Income rates have increased in response to the shortage as employers are working harder to attract staff.
“While the income trend is positive we’re still well below the New Zealand average – we need to close the gap further.
“Expect the labour market to change this year as open borders take effect, but overall we can expect this to be a market that favours employees.”
Top tips: How to ask for a pay rise
The Staffroom Ltd Tauranga director Jill Cachemaille
– Keeping your potential salary rise conversations realistic
– Do your research and provide valid reasons why you are worthy of a pay increase
– Use examples of your work
Talent ID Recruitment Rotorua director Kellie Hamlett
– Go with a value of the proposition. Give your employer examples of how you have added value to the business, not just simply ask for one
– Go in well-equipped and armed with data
– Have a business case in place for why you feel you qualify for a pay rise
Holland Beckett Law partner Christie McGregor
– Make your request in a confident and business-like manner.
– Don’t let your emotions drive your behaviour. Justify your request with evidence of comparable remuneration and your achievements.
– If you know that you find it difficult to have these conversations, write an outline of what you want to say, before speaking to your employer.
– Have a figure in your head that you think is a reasonable pay rise, so that you have a goal to negotiate toward.
– Consider any benefits along with salary that form part of your package as well.
Remember that the employer needs time to consider the request too, and may well need to go away and consider and get back to you.
Tauranga Business Chamber chief executive Matt Cowley
– It depends on each situation. Those in senior positions might be better off asking for equity in the business, rather than salary
– Chasing the highest offer doesn’t necessarily lead to more happiness. Some workplace cultures are better than others. Some bosses are better than others
– If you enjoy your work, start having conversations with your boss early to give them time to think. Leave your minimum payrise ultimatum as a last resort strategy
Highest paid average salary
1 Wellington – Wellington $81,280
2 Auckland – Auckland City $79,641
3 Bay Of Plenty – Kawerau $69,233
4 Hawkes Bay – Central Hawkes Bay $66,935
5 Auckland – North Shore City $66,867
Source: TradeMe Jobs
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