Time to read : 5 Minutes
We all know that inflation has been making us feel financially stretched and stressed.
But there’s been a second factor aggravating the situation – one you might even be able to improve – and that’s your pay.
Inflation hit a high of 7.8% in December 2022, however as it has slowly come down (thanks to the higher interest rates that are also putting pressure on our hip pockets), wages growth has been at best half.
But guess what? Not anymore.
In fact, the wages price index first surpassed the consumer prices index 1.5 years ago.
As reported by the ABS on 14 May, it’s running at 3.4% annually. That’s well above the current inflation rate of 2.4%.
The latest figures show the rate is also ticking up again, for the first time since the June quarter.
But at 3.4%, it is still down from the September quarter’s annual increase of 3.6%… it was 3.2% in December. I will come back to what I call the September effect, in a sec.
For the March quarter, the biggest salary boosts were felt by workers in health care and social assistance (+1.4%) and education and training (+1.3%).
But it looks a little different for pay rises over the past year, with it being happy (pay) days for employees in energy, gas, water and waste (more than 4%), above the health and education categories.
Annual & quarterly movement by industry
Source: ABS
So did you feel it? Did you benefit from the breathing space – courtesy of your employer – that other workers did to their bottom lines? Well, let’s talk salary reviews.
How often are you entitled to salary reviews?
It may surprise you to hear that there is no requirement in the Fair Work Act to conduct performance reviews, let alone with any specific frequency.
So if your workplace doesn't have a formal process of salary reviews, it’s vital to be pro-active.
Because there was a telling trend in the wage prices data for the year to December… and you should act to turn it to your advantage.
The bulk of pay rises were experienced not by employees on awards or enterprise agreements, but by people who can individually negotiate with their employer.
Contributions to quarterly wage growth
Source: ABS
And do you know a big part of the reason? It’s that unemployment is still near record lows. In other words, your boss needs to both keep you and keep you sweet.
Though in the March figures, enterprise agreements contributed to over half of all quarterly growth, for the first time since September 2020, this could be a one-off as the effect of those agreements flowed through (especially public sector and state-based ones).
So just how do you ask for more money in a way that gives you the best chance of success?
Here is my strategy to ‘win’ a pay rise.
The WIN-ning negotiation strategy
Wait for the right time
If pay reviews don’t happen regularly or on a schedule in your workplace, you need to ask. The wages index also reveals that some employees are enjoying more than one pay lift a year.
However, your timing is key.
Whatever you do, do not bail up your boss with a demand without notice for more money.
Instead, send a message or email requesting a meeting specifically about your salary – this alerts them and plants the seed.
There’s another issue to timing as well – timing with regards to the business you are in.
That September effect I mentioned earlier is the impact of end-of-financial-year / beginning-of-financial-year pay reviews. You can see higher September quarter wage rises every year in the ABS figures, as budgets are reviewed and reset.
So getting the ball rolling now may be good timing.
Impress with numbers to back you up
When it comes to pay review conversations, preparation is everything.
Ahead of the meeting you make, you need to collect and collate evidence that you have met – and preferably exceeded – your key performance indicators or KPIs.
But what will really sway your case, is evidence that you’ve made a tangible difference to the company’s revenue and profit, if that’s measurable.
Get ready to negotiate
This is meeting ‘show time’… and your demeanour and tone is everything.
You need to be clear, calm and compelling, no matter how the chat unfolds.
But a further clever approach is to not leap straight into what you want… but begin the conversation from your boss’s point of view.
How are they going? What are their priorities? And – vitally – how have you helped?
Align your interests from the start… because, at the end of the day it’s not just about the sales or money you’ve brought in but whether you’ve also made things easier for your superior.
Bottom line
By approaching your salary review with these strategies, you can give yourself the very best chance of fattening your pay packet.
Don’t forget to work other financial angles either – what about asking for heightened work perks or even an increase in the super you are paid?
But if there’s no economic improvement – in any form – coming your way, maybe bide your time a little. You are probably more likely to receive one in the next review round.
If not, consider the process a practice run for negotiating with a new employer.
With unemployment close to record lows, you could very well be snapped up by a rival business or in a related industry. And that’s the best time to score a big jump in your salary.
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Disclaimer
The information contained on this web page is of general nature only and has been prepared without taking into consideration your objectives, needs and financial situation. You should check with a financial professional before making any decisions. Any opinions expressed within an article are those of the author and do not specifically reflect the views of Compare Club Australia Pty Ltd.
