In 2019, Australian and New Zealand workers are looking at some of the lowest real-wage increases around the globe. Although companies will be spending more money on employees, that extra cash won’t really help workers build much wealth. In short: inflation is eating top-line growth.

In Australia, this means a 0.2 percent real-wage increase. In New Zealand, things are marginally better at 0.3 percent. In contrast, our Asian neighbours are set to enjoy the fastest growth in wages globally, at 2.6 percent.

In this environment, the critical question for ANZ business leaders in 2019 will be: how do we make sure our best talent stay engaged and motivated when big salary increases are off the table?

Is 2019 the tipping point?

The Australian and New Zealand economies continue to hum along and both countries are basically at full employment. Salaries, on the other hand, are stagnating. This has been the case since 2012, with Australian wage increases consistently falling below the global average. The result? Workers are now worse off today than they were six years ago.

Our research shows that salary isn’t everything – it’s certainly not the number one reason why people make the decision to change employers. At the same time, we also know that consistent low increases can lead to employee disengagement and it tends to be easier for people to secure bigger increases when they change organisations. All this suggests that we could be reaching a tipping point in 2019, where the best talent will start prioritising pay again in their decision-making process.

Organisations must consider whether they are offering a compelling overall rewards package otherwise, they face losing valued employees.

Flex your thinking… and your rewards

Faced with these conditions, business leaders need to think more creatively about how they can keep their employees engaged. Being more flexible and agile in crafting remuneration packages will become increasingly important. And the plural ‘packages’ is key – one-size-fits-all won’t cut it.

While employees want to feel valued and remunerated accordingly, overall reward packages including flexible working, better work-life balance and career progression are highly valued by Australians and New Zealanders. And this is an area where the region can improve. In particular, leaders should consider how they can create less hierarchical and linear progression paths for their workforces.

Paying your people correctly is important – but it’s only one of the things that contributes to an engaged workforce. When pay is barely rising, it’s career development, clarity on how people contribute, and leadership that inspires people which become even more important in retaining and motivating employees.

Organisations should take a holistic approach to talent acquisition and retention, and review their employee value proposition to make sure it’s a compelling offer for the best talent. Because we know when employees feel motivated, they’re more likely to stay and perform.

About the study

The data was drawn from Korn Ferry’s pay database which contains data for 500 organisations in the ANZ region and more than 25,000 from 110 countries worldwide, covering some 20 million job holders.

It shows predicted salary increases, as forecasted by global HR leaders, for 2019 and compares them to predictions made at this time last year regarding 2018. It also compares them to 2019 inflation forecasts from the Economist Intelligence Unit.

Our interactive site with more detailed figures, and a downloadable infographic with headline figures for each country is here.

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About The Contributors

Trevor Warden is an Associate Client Partner for Korn Ferry Advisory, Australia. Trevor helps organisations and people become more effective through finding job clarity, enabling them to be the best they can be and building a motivating environment for high performance. During his consulting career, which spans two continents and two decades, Trevor has worked with a wide variety of organisations. He brings with him enormous experience to help organisations review their structures, create doable jobs and develop wide ranging Employee Value Propositions.



Rachael is a Partner based in Korn Ferry’s Auckland office. Leading New Zealand’s Advisory practice, Rachael works with directors, CEO's, and senior management teams to drive improved business performance through people performance. Rachael has over 20 years’ experience in Human Resources (HR) and remuneration management and has worked in both corporate and consulting roles in banking and finance, telecommunications, IT and not-for-profit.

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