Inflation, cost of living and high turnover contribute to one in four Australian employees receiving more than 7 per cent pay raise in 2023 

Mercer’s Total Remuneration Survey reveals salary trends from over 1,200 organisations

• Mining and metals, high tech and logistics among industries with large proportion of employees receiving salary increases of greater than 7 per cent
• Australian employers raised base salaries to 4 per cent in effort to retain talent
• Roles in sales, marketing and product management; engineering and science; and IT telecom and internet were the most difficult to fill and retain
• Despite inflation pressures easing, employers expect to set 2024 salary budgets at similar levels 

Mercer, a business of Marsh McLennan (NYSE: MMC) and a global leader in redefining the world of work, reshaping retirement and investment outcomes, and unlocking real health and well-being has today released its annual remuneration survey.

This year’s Total Remuneration Survey findings reveal that Australian employers raised median base salaries to 4 per cent for existing employees in 2023. One in four employees, however, received salary increases in excess of 7 per cent.

Mining and metals, high tech and logistics were among the industries passing on salary increases of more than 7 per cent to a large proportion of their employees. For example, 33.6 per cent – or one-third – of employees in mining and metals fell within this category.

And, with organisations planning to allocate 4 per cent to overall payroll budget increases in 2024, salary levels are forecast to remain the same in the year ahead.

Mercer’s Workforce Solutions Leader for the Pacific region, Cynthia Cottrell said the generous salary increases are likely the output of deliberate retention strategies.

“Retention is a primary focus for Australian organisations, who recorded their highest employee turnover rate in more than five years in 2022, at 21.4 per cent. We expect to see similar results in 2023,” Ms Cottrell said.

“This surge in employee mobility could be attributed to a range of factors including inflation and cost of living pressures, ongoing low unemployment rates, and the trend towards the ‘post-pandemic career rethink’. Consequently, organisations are turning to remuneration as a way to retain top talent.”

The survey revealed that roles in sales, marketing and product management; engineering and science; IT, telecom and internet; and production and skilled trades were the most difficult to fill and retain. As a result, some jobs received exponentially greater salary increases – including entry level Project Engineering and Market Research & Analysis professionals at 19 per cent and 13.8 per cent respectively.

While remuneration is evidently a driving factor for attracting and retaining employees, Ms Cottrell argues that organisations should think holistically – and innovatively – about how to address the war for talent and fill in-demand jobs.

“In Australia’s tight labour market, traditional talent models won’t cut it. There is simply not the supply to meet the demand,” Ms Cottrell said.

“And, we know that for most employees, it’s never been all about the money. With record numbers of people changing jobs, are you giving your talent a meaningful reason to stay, or new hires a reason to join?”

Ms Cottrell suggests that a skills-powered model could be the answer.

“In today’s competitive environment, I’d urge organisations to foster a skills-first mindset. We need to move away from this legacy perception that you can only fill a role by hiring or redeploying someone with like-for-like experience. Resetting the work operating system around skills, not jobs, opens up a powerful new way of thinking about work and talent – both for the organisation and for its people,” she concluded.

The Total Remuneration Survey (TRS) is one of the world’s largest and most comprehensive sources of compensation and benefits market data. Representing a broad range of industries, the 2023 Australian Total Remuneration Survey delivers current insights on pay for employees across all skill levels and career streams.

More than 1,200 organisations participated in the survey, suggesting that organisations continue to rely on the value of relevant salary market data to make informed and strategic decisions.