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Wages may be rising: Why your boss is freaking out

Close up of a persons hands holding $50, $20 and $10 notes.
Wages may soon need to rise but businesses are concerned about meeting employee expectations. (Source: Getty)

Australia is in the midst of a skills shortage. This means businesses must compete to attract good workers.

The simplest way to attract good workers is by offering them higher wages, but Aussie businesses are hesitant to do so.

And we’re not alone. In the United States, a number of S&P 500 companies complained that rising wages had affected their bottom line, with 85 per cent saying they planned to pass the cost on to the consumer.

Why might wages rise?

Last year was one of the most challenging times for businesses looking to fill vacant positions.

This was due to closed borders, the brain drain and the Great Resignation.

The latest independent C-suite research by Robert Half found that despite the gradual reopening of international borders, more than half (54 per cent) of Australian business leaders believed finding qualified employees in 2022 would be more challenging than before the pandemic.

The fierce competition for talent has put jobseekers in the driver's seat, with the ability to leverage their position to ask for better pay and benefits.

Robert Half found that when asked about their biggest hiring challenge in 2022, almost four in 10 (39 per cent) Australian business leaders said meeting candidates’ salary expectations would be their main challenge.

This was followed by reskilling/upskilling existing employees (36 per cent) and finding candidates who possessed the right technical skills (36 per cent).

“Competition for talent is strong, and professionals with in-demand skills are aware of the hiring market challenges and the bargaining power this gives them – particularly with regards to salary,” Robert Half director Nicole Gorton said.

“Companies are increasingly turning to poaching talent from the competition to tap into a broader talent pool, and many are receiving multiple job offers with generous salary increases, bespoke benefit packages, and title changes.”

Gorton said with more opportunities and enticing packages, employers would need to adjust to higher salary expectations to meet the market expectation.

“Alongside remuneration, sign-on bonuses, opportunities for advancement and concrete efforts to support employee work-life balance through hybrid working will also distinguish employers of choice in the war for talent this year,” Gorton said.

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