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The skills shortage that caused firms to pay more for new employees now looks to force organisations to increase pay for existing staff.
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Businesses face loyalty tax to retain staff
30 January 2023
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The skills shortage that forced Australian businesses into overpaying to attract new staff could also pressure firms into paying existing staff a loyalty tax to retain them, according to employment firm Hays.
Australian and New Zealand managing director of Hays Nick Deligiannis said employees that remained loyal in 2022 would now be looking for a financial boost to match the level of remuneration new starters received.
“Skills shortages drove up salary offers for many new starters in 2022,” said Mr Deligiannis.
“For skills in highest demand, employers offered a salary increase up to CPI to secure a candidate.”
“This exceeded average salary increases for existing staff, financially penalising loyal employees who are acutely aware of the monetary benefit for changing jobs.”
On top of the salary increases, 8 per cent of new employees told Hays they also received a starting bonus in the past six months.
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Hays said now was the time for loyal employees to look to achieve equal if not greater remuneration than new starters.
Its first tip was for workers to research typical salaries and job advertisements for similar roles and compare pay, the firm also said to remain objective and determine if the new hire does possess additional skills or expertise from you.
Secondly, employees need to collate their achievements, they should gather examples of recent work that exceeds expectations, or that they were proud of, intending to present clear evidence of their value, said Hays.
Workers must then book a meeting with their manager or boss to explain their concerns and mention that they feel underpaid while presenting their research and achievements, and then state how much they believe their efforts are worth.
While unequal pay was a concern for employees it should also be a concern for employers, said Hays.
“Any pay discrepancy between new and tenured employees can impact employee engagement, productivity, and turnover unless you address it quickly,” the firm said.
Hays said employers should compare external and new starter salaries with all their employees’ wages and if any salaries have fallen out of sync with market trends and new starters see if they could offer a raise.
The firm also said employers should try to be transparent and publicly disclose the salary when recruiting for a new role, and if not, should ensure the starting salary was justifiable in the context of similar positions within their firm.
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