Mark Smith has spent almost three decades working in the recruitment industry. What’s happening to the job market in 2022, he feels, is unprecedented.
“This is the tightest labour market I’ve seen in my nearly 30 years in recruitment,” Smith says. “It’s never been like this at all. It’s extraordinary.”
The Reserve Bank of Australia is forecasting wages growth of 2.75% this year and 3% in 2023. That, combined with trends such as the current boom in the number of job ads, means Australians making career moves in the next 12 months could snag a big pay rise.
“If you are entering into the [job] market right now, then you are in a much better position than I’ve seen in 28 years to be able to negotiate a significant increase on your current salary,” Smith says. “We’re in a very hot marketplace.”
Why are salaries soaring?
A number of factors have led to wages growth in 2022, but most of them link back to the pandemic.
Leigh Broderick, senior analytics manager at Seek, says: “Broadly speaking, wages growth has picked up because economic activity has grown strongly after the initial Covid-19 shock.” It’s a boom that we’ve waited a long time for – Broderick says if the RBA’s wage growth predictions are correct, “it will be the first time in a decade that Australian wages growth has had a 3 in front of it”.
Government stimulus packages and low interest rates have helped the growth of economic activity as we enter the recovery phase of the pandemic. And with immigration from overseas still low, there are fewer candidates for employers to choose from at hiring time.
Some roles in the healthcare and medical sector are experiencing 30% increase in salaries
Smith says: “It is a classic supply and demand situation. I think that we’re in an unusual time in the marketplace, where we have substantial demand for staff as most companies are trying to take advantage of the recovery. But then alongside that we have restraints in supply of labour, because there are no transitory people coming to Australia, or working holidaymakers, or people on short-term visas.”
Psychological factors have also played a role in wages growth. Many Australians have been unwilling to shake things up during the pandemic, with 59% of workers saying their preference for job security has contributed to their reluctance to change jobs, according to Seek research. This has reduced the supply of candidates for vacant roles.
In addition, some of the benefits that employers previously might have used to tempt candidates – such as the ability to work from home or a flexible schedule – are now common across many white collar industries. They need to provide other incentives, such as higher wages. All of these factors have pushed salaries up as businesses compete for the best staff.
Wage growth has been particularly apparent in industries such as hospitality and retail, which have seen the fastest rise in salaries as they try to win back staff who went down different career paths during the lockdowns of 2020 and 2021. Broderick says industries including professional services and real estate have also experienced solid wage gains over the past 12 months.
Other industries experiencing pay rises include education and training: education consultants are enjoying 35% growth in advertised salaries compared with pre-pandemic levels. Healthcare and medical is witnessing up to 31% growth in advertised salaries across some roles, while certain government and defence jobs have surged up to 29% in advertised salaries.
Jobs with the greatest salary growth
*Based on average annual full time and annualised hourly salaries (excluding contract roles) for job ads listed on SEEK from Nov21-Feb22 compared to Nov19-Feb20.
Smith feels that advertised salaries are rising “across the board” – the caveat being that only those who take the leap to change jobs will benefit from the wages boom.
“I just want to be clear here,” he says. “When I’m talking about salary increases, I’m not talking about everybody who’s in a job right now. I’m talking about people who are changing jobs. When people are changing jobs, they’re managing to secure a substantial pay rise.”
So how can you snag a pay rise?
Smith advises anyone looking to change jobs to be upfront about salary expectations from the get-go. A good first step is to use Seek’s salary lookup tool to research average salaries.
“What you don’t want to do is leave [that discussion] right till the end,” he says. “When you’ve got an offer on the table and say, ‘No, it’s not good enough, I need more money’ – that’s just going to leave a bad taste in everybody’s mouth. Be upfront with what your expectations are. Don’t hide what you’re currently on, because everybody knows that it’s a market that’s on the move.”
Smith’s advice to those looking to bump up their income is to take advantage of this rare moment in history – because it won’t last forever. He believes wage growth will continue through 2022 and into at least the first half of 2023 but may cool after that. That means the time to strike is now.
“Really, it’s a great time to be a candidate looking for a new opportunity in Australia right now,” he says. “There’s never been a better time to look for a new job.”
Explore the industries in which salaries have boomed since Covid.
