Most Australian workers can expect a slim pay rise or no salary increase in the year ahead as employers keep the purse strings tight, prompting a warning that they risk losing staff to better offers.
Businesses are enjoying stronger activity and hiring more permanent staff but two thirds of employers plan to offer pay rises under three per cent this year, while 12 per cent say they will not lift wages, the latest Hays Salary Guide survey shows.
"Employers remain reluctant to offer substantial increases unless absolutely necessary to secure a candidate with skills in short supply," Hays Australia and New Zealand managing director Nick Deligiannis said.
Despite 70 per cent of employers expecting to hire more permanent staff and business activity to increase in the year ahead, employers remained focused on keeping costs down, he said.
"It seems that employers will not loosen the purse strings in the year ahead," the report said.
The survey of almost 3,000 organisations in Australia and New Zealand released on Thursday found that just 22 per cent of employees can expect a salary increase above three per cent at their next pay review.
And just one per cent of employers can bank on a salary lift of more than 10 per cent.
Mr Deligiannis warned employers not to be complacent, with survey results showing 41 per cent of employees intend to ask for a pay rise at their next pay review while staff turnover has increased in 29 per cent of organisations.
Employers could be keeping salaries steady to recoup revenue, the report said, or they may not be aware that an increase in hiring will reduce the pool of suitable and available talent.
"As soon as a few employers in a particular sector or industry start to use salary to compete for top talent, those at the back of the pack for salary increases will be the first to experience even greater levels of turnover," the report said.
Last year 16 per cent of employers offered no salary increases while 58 per cent received an increase of less than three per cent.
The report follows the release of Australia's latest GDP figures on Wednesday, which showed net disposable income - a key measure of living standards - fell for the eighth consecutive quarter.
