‘Tug of war’ over construction salaries
The Hays Salary Guide for FY 2019/2020 has shown that there is a ‘tug of war’ over construction salaries with pay rises expected in the majority of businesses surveyed but not as high as some had hoped for.
Hays surveyed more than 3,400 organisations and found that 88% of construction, engineering and property industry employers will increase salaries in their next review, up from 84% who did so in their last review.
However, the value of the increases are falling with 54% intending to raise salaries at the lower level of 3% or less, up from 45% in the last review. Just 7% of employers (down from 15%) will grant pay rises of more than 6%.
In their interactions with professionals in the industry, Hays found that 22% of workers expect no increase while 29% expect 3% or more, 29% expect between 3 and 6%, and 20% expect a raise of 6% or more. Off the back of that, 57% cite salary increase as their main priority and 46% intend to ask for a pay rise, with others looking elsewhere. In total, 41% of jobseekers say uncompetitive salary provoked a job search.
Hays Construction senior regional director Simon Bristow says years of sedate salary increases have taken their toll and a subsequent ‘tug of war’ over salaries has ensued.
“On the one hand, we have professionals telling us they’ve prioritised a pay rise and are prepared to enter the job market to improve their earnings. On the other, employers tell us they want to add to their headcount and are being impacted by skill shortages, yet they plan to curtail salary increases.”
Salary trends vary depending on location. In New South Wales, salary pressure has stabilised while in Canberra staff shortages ensure gentle upward pressure. In Victoria, demand is rising for experienced contract administrators, project managers, design managers, engineers and site managers in civil infrastructure and the commercial market. Salaries continue to increase as a result.
In Tasmania, ongoing skills shortages keep upward pressure on salaries. In South East Queensland, the project pipeline is fuelling high demand for commercial estimators, contract administrators and infrastructure professionals but salaries are expected to remain stable.
Perth is seeing demand for project and construction managers but, again, salaries are expected to remain stable. In South Australia, commercial construction has improved but it is expected that salaries will remain consistent. Darwin is also expected to remain stable in salary levels.
Simon says: “We’re also seeing salary growth in regional locations. This is likely to continue as organisations attempt to attract skills in short supply from major cities.”
The report also revealed trends in the area of staff benefits and the impact of staff shortages.
It found that 67% of organisations offer flexible salary packaging. Of these, the most common benefit is salary sacrifice, offered by 55% of employers to all employees. This is followed by above mandatory superannuation (offered by 37% of employers to all employees), parking (33%), bonuses
(27%) and private health insurance (26%).
Of the benefits offered to a select few employees, private expenses tops the list, with 70% of employers offering it to a hand-picked number of employees.
In terms of business growth, 68% of employers said activity had increased over the past year, with 70% expecting it to increase in the next 12 months. As a result, 47% intend to increase permanent staff levels over the coming year, but 70% say skill shortages will impact the effective operation of their business or department in either a significant (28%) or minor (42%) way.
Planning ahead, 54% of employers are restructuring to keep up with changing business needs – the key driver of these restructures is a change in the required skill sets. In skill short areas, 57% of employers would consider employing or sponsoring a qualified overseas candidate.