The Year of Economic Uncertainty - 2002

Motivating and retaining staff during turbulent economic times

The last few months have seen the domestic unemployment rate increase to 6.9 per cent, with the figure set to reach 7 per cent in the December quarter. This, accompanied by global and domestic staff retrenchments, negative international business sentiment and current pressures on business profit margins, means that domestic wage pressures are soft.

"We are now in an employers market," says Classified Salary Information Services' Managing Director, Mr Peter Barton, "new hires are being recruited at reduced rates, to cope with the pressure on profit margins."

Last week's Reserve Bank interest rate cut will fuel consumer spending and, coupled with the first home buyer's grant, will act to inflate housing prices. These domestic inflationary pressures may, in turn, cause the underlying inflation rate to hit the Reserve Bank's top-end target of 3 per cent. Traditionally, wages have coincided with rises in the Consumer Price Index, which will increase with inflation.

Other economic data suggests that employers are hiring cautiously and reducing worker's hours, instead of retrenching staff. While, concurrently, the ANZ Bank's job advertisement survey reported a 0.9 per cent rise in August.

The problem for HR managers is adjusting salaries, benefits and wages to reflect these changing economic conditions, when economic data is so often conflicting.

Classified Salary Information Services Pty Limited (CSi) believes the answer for HR managers and administrative staff is salary survey data. The data in the salary survey is a reflection of real increases or decreases given to employees in the Australian marketplace. And, during times of economic uncertainty, those companies wishing to reduce salaries or employ new recruits at reduced rates, will be able to do so with market-related data as a guide.

"The trends identified in CSi's survey data are important, as employees have become accustomed to salary increases of 5 per cent plus. In the current economic climate, companies are reporting much lower increases, often from 0 - 5 per cent," says Mr Barton, "without survey data to assist them, companies may be giving increases too small to stay competitive or too large for the current climate."

The data within CSi's surveys is analysed by company size, job family and industry- the key factors in determining the level and composition of pay. Please phone CSi on (02) 9415 3455 for further information.

Erica Holburn, CSi Marketing Communications Officer