INTHEBLACK September 2021 - Magazine - Page 69
[global financial crisis], labour incomes in
Australia grew steadily and strongly, at annual
rates of 4 to 5 per cent or even higher”.
The current deceleration in wages dates
from 2013, when the Wage Price Index fell
below 2 per cent, where it has stayed ever since.
During Dr Philip Lowe’s five-year tenure as RBA
governor, he has repeatedly called on employers
to increase wages to help keep up with inflation,
which ideally tracks between 2 per cent and 3 per
cent each year. In 2018, Lowe gave 3.5 per cent as
a healthy rate of growth for wages, far above the
current rate of 1.4 per cent.
ECONOMISTS’ CASE FOR WAGE RISES
Slow wage growth reduces household gross
disposable income, which impedes consumer
demand and results in lower government revenue.
With interest rates at a record low, the RBA is
relying on wage growth to boost inflation and
kick-start economic growth.
Wage stagnation “is a real problem”, says Dr Mark
Dean, Laurie Carmichael Distinguished Research
Fellow at the Australia Institute’s Centre for Future
Work. “If businesses aren’t investing in new staff
or other capital investments due to uncertain
economic conditions, along with no wage growth,
this can have a real effect on aggregate demand.
There’s a total lack of spending.”
Wage growth can also benefit employers.
Unemployment figures released in June 2021
showed a 4.9 per cent decrease in unemployment,
and the participation rate remained at 66.2 per cent.
With skilled migration reduced due to the closure of
Australia’s international border, there is a strong
chance we are entering a new war for talent.
Dean says that, “as demand increases for
accountants and finance professionals”,
organisations that are willing to award pay rises
to valued employees are more likely to secure –
and retain – highly skilled and experienced staff
ahead of competitors.
HOW TO NEGOTIATE A PAY RISE
Securing a pay rise is, of course, easier said than
done. If you are ready to do your “patriotic duty”
and negotiate with your employer, career
counsellor Lois Keay-Smith, founder of Career
Wisdom, offers these tips to help improve your
chances of success.
DO YOUR RESEARCH
Articulating a solid case for a pay rise requires
preparation. “It is about doing your homework,
looking at what you’ve brought to the table
and reflecting on it,” says Keay-Smith.
Quiz trusted colleagues in an “informal 360”
on their views of your strengths and
achievements. “Talk to others about what
they’ve noticed,” says Keay-Smith.
“If you’re sitting at your desk doing great
work, but no one knows about it, it’s difficult
to have a meeting with your boss to ask for
more money.”
CONSIDER YOUR PLACE IN THE MARKET
Research the current state of play in your
organisation and your industry more broadly.
“Do your homework on current rates of
remuneration for your role, and be aware of how
you’re valued in the marketplace,” says KeaySmith. “Salary surveys help.”
Dean adds that “employees are in a good
position to negotiate for pay rises when there
are skills shortages”.
Accountants are currently in short supply
in South Australia, for example, thanks to the
migration of services to larger cities in the
eastern states. In 2019, just 57 per cent of
accountancy vacancies in South Australia were
filled, placing qualified accountants in a strong
position to negotiate for higher remuneration.
“Do your homework
on current rates of
remuneration for
your role, and be
aware of how you’re
valued in the
marketplace.”
LOIS KEAY-SMITH, CAREER WISDOM
STATE YOUR CASE
You should present a three-pronged argument
for your pay rise. First, articulate the value you
bring to the organisation in your current role
and provide concrete examples of your success.
Second, outline the opportunity cost – ask,
“If I wasn’t there, what would be the outcome?”.
However, Keay-Smith cautions that “it’s
important not to overplay this one, because
no one is irreplaceable”.
Finally, speak to your values as a person
– your strengths, attributes and commitment
to your role – and your future contribution.
“In these times, leaders are looking for people
who can step up and bring new ideas and more
value into the future,” Keay-Smith says.
TRY AND TRY AGAIN
If your request for a pay rise is refused, don’t
give up.
Seek an agreement to review your request in
three or six months, suggests Keay-Smith. Find
out “what needs to change between now and
then, and what you can work on during that
time to put yourself in a better position”.
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TO BORROW
Negotiation: Smart
Skills from the
CPA Library
intheblack.com September 2021 69