The FINANCIAL — Australia. Australian organisations are offering young talent bigger pay rises than their older counterparts in order to retain ’high potentials’, according to Mercer’s latest salary survey.
Mercer’s Market Issues Survey of 216 organisations reveals salary increases for the 18-24 age group is highest with the median movement for 2010 at 8.8%, which is 4.8% above the national median. The survey also shows the rate of salary increases slows as age increases, with those aged 25-39 receiving a 5.0% salary increase, aged 40-50 receiving 4.0% and 51-65 year olds a 3.9% increase.
Martin Turner, Principal in Mercer’s human capital business, said Australian organisations are acutely aware of the risks associated with an ageing workforce and recognise harnessing young talent and differentiating rewards across their workforce is vital to success for the future.
“Graduate and entry level roles are attracting the bigger salary increases. As unemployment falls and the economy recovers, a return to skills shortages is looming, so organisations are investing in retaining people and roles with a strong career stream and development opportunities.
“Generation Y are a highly mobile age group and employers are realising that offering them attractive salary increases is one of the ways of increasing the likelihood of retaining them.
“Our workforce is getting older and it’s important to encourage Baby Boomers to remain in the workforce for as long as possible, but the reality is they are retiring and organisations are left with talent shortages and some of those shortages can be filled with Generation Ys,” Mr Turner said.
“The gap that exists between age group and salary movements is also a result of more promotional opportunities in low-level roles. There are fewer promotion opportunities up the organisation hierarchy with many reaching a natural ‘ceiling’ later in their career. Moreover, the relatively lower salaries of newer entrants to the workforce means employers can provide a good increase, without breaking the salary budget,” he said.
Mercer’s survey found that if economic conditions continue to improve as expected, salaries in 2011 and 2012 are forecast to rise by an average of 4% in each of these years.
However, Mr Turner said the rate of growth in salaries as a national general market figure is becoming less relevant as a salary reference point.
“While the median salary movement figure is 4% for the year ending 2010, this belies the need for organisations to identify differentiating factors that can determine rewards such as performance, job family and geography.
“A ‘vanilla’ offering is the enemy of employee engagement, as it does not encourage discretionary effort. Smart employers will identify the ‘hot buttons’ for particular groups and gear their rewards to these. For example, employees in their 30s may be more attracted to paid parental leave, while Baby Boomers want discounted financial advice,” he said.
Hotspots
Salary movements varied across job families and unlike trends seen before the downturn, none of the hot jobs are roles at a senior level.
2011 hot jobs include:
Engineering 5.3%
Construction 5.3%
Research & Development 4.9%
Sales 4.8%
Legal 4.4%
2010 average career stream movements:
Executive 4.5%
Management 4.8%
Professional 6.2%
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