Australians could see their real wages fall in 2016 for the first time since the GFC.
Pay might not rise enough to make up for inflation next year, according to a study conducted by management consultancy the Hay Group.
The forecast follows an already bleak year, with average salaries in 2015 rising by just 2.7%, down from 3.6% the year before.
The Australian Salary Movement Index is an annual overview of the national reward climate. It features data from Hay Group’s PayNet database which includes results from 440 local and multinational organisations and 260,000 jobs.
Official statistics show wages in Australia are growing at the slowest pace on record. According to the Australian Bureau of Statistics wages increased by a paltry 2.27% in the year June.
According to Hay, here’s how the numbers look over five years, compared the actual to the inflation-adjusted rises:
The financial services sector was one of the worst performing industries in 2015 with fixed wages growing at only 2.6%, down from 4%.
Steve Paola, the study co-author and a consultant at the Hay Group, says the downturn in the resources sector, low unemployment rates and oversupply in technical roles all played a role in slow pay movements.
“The data will come as a reality check for many workers who had experienced almost unprecedented wage growth during the past few years,” says Paola. “Salary increases haven’t been at sustainable levels for a number of years and we’re now seeing a uniform correction.”
“We have seen salary movements consolidate in almost all of the country’s major business sectors and in almost all roles. Unlike in the past few years, there are very few standout roles or industries when it comes to salary growth. This is seen with the salary movement predicted to be at 2.5% in 2016.”
Australian salaries are among the worst performing in the world, with inflation-adjusted salary growth at 1.2% for 2015.
This is below New Zealand at 1.6% as well as Asian (3.1%), European (1.6%) and African regions (2%). Only North America (0.7%) and Latin America (-1.1%) faced a darker outlook.
According to Hay, human resource directors are increasingly looking at non-financial incentives such as improving work-life balance, remote working and extra leave.
“Organisation-wide salary freezes are unavoidable for many companies and could cause discontent amongst the work force,” says says Paola.
“To cushion the blow, organisations need to make existing non-financial reward programs more accessible and ensure they are completely transparent when it comes to communicating with their employees about reward policies.”
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