More than 400,000 job vacancies put workers in box seat

There were almost 440,000 job vacancies in the three months to the end of February this year, putting workers in pole position to negotiate pay rises or find better remuneration elsewhere.

National job vacancies are about 10 per cent higher than a year ago and still significantly higher than before the pandemic. However, this is not automatically translating to higher wages: during 2022, wages grew 3.3 per cent, seasonally adjusted, while inflation rose 7.8 per cent over the same period.

Kris Grant, the chief executive of recruitment firm ASPL Group, says skilled workers are in a strong position to negotiate a pay rise.Credit:

With inflation cutting into the purchasing power of wages, workers have a strong incentive to make the most of the difficulties employers are having in recruiting and retaining staff.

This could be as good as it gets to negotiate a pay rise as demand for labour slows over this year, with the supply of labour increasing due to the uptick of skilled workers coming to Australia.

The Australian Bureau of Statistics jobs data shows there are industries, such as professional services, health, education and mining, where the vacancy rates are particularly high.

At the other end of the spectrum, retail job vacancies fell, with the increase in foreign students coming to Australia likely to have helped fill vacancies in the retail sector, says Belinda Allen, a senior economist at the Commonwealth Bank.

“With an unemployment rate of 3.5 per cent, the labour market remains tight, although the trend rate of unemployment is ticking up,” Allen says. “We expect the unemployment rate to lift from here,” she says.

Though the jobless rate will likely rise, it will stay low. Economists at ANZ bank are expecting the labour market to remain very tight through 2023, with the jobless rate staying below 4 per cent.

Kris Grant, the chief executive of ASPL Group, a management consultancy and recruitment firm, says employers are granting big pay increases in the technology and financial services sectors of the economy, and to workers in the digital economy generally.

Mercer’s Total Remuneration Survey, released late last year, showed that jobs in information technology, sales, marketing and engineering were offering premium compensation packages for hard-to-fill roles.

Grant says the greater bargaining power of workers is also resulting in more of them obtaining pay rises by switching jobs. More people are also taking second jobs, or working more hours, to help them ride out the rise in the cost of living, she says.

While it is easy to say that many workers are in a good position to negotiate higher pay, for many, especially for younger workers, it can be a difficult conversation to have with their boss, Grant says.

She says those asking for a pay rise should research comparable salaries being paid for similar roles, outline achievements and value to the organisation, practise asking for a pay rise with a friend or trusted colleague who is experienced in management, and set up a private meeting with their boss.

If there is no success in securing a pay rise, there are other employers. The Hayes 2022-23 Salary Guide found 91 per cent of surveyed employers say they are experiencing skills shortages, with almost 60 per cent of employers reporting an increase in staff turnover.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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