Mining, tech and logistics workers saw the highest increase to their wages throughout 2023, while one in four Australians received more than a 7 per cent pay rise throughout the year.

Mercer’s yearly Total Remuneration Survey also found that Australian employers raised the base salary budgets by an average of 4 per cent throughout the year.

Cynthia Cottrell, Mercer’s workforce solutions leader for the Pacific, said the salary increases were likely an effort to retain employees.

“Retention is a primary focus for Australian organisations, which recorded their highest employee turnover rate in more than five years in 2022, at 21.4 per cent,” she said.

“We expect to see similar results in 2023.”

Entry-level project engineering and market research and analysis professional were two roles that experienced the biggest increase in salary throughout the year at 19 per cent and 13.8 per cent respectively.

The increases ranged between 3.9 and 4.6 per cent across the different states and territories, with Queensland having the highest increase and the ACT the lowest.

Thirty three per cent of mining and metals employees received a pay rise of more than 7 per cent of their salary, and organisations responding to the survey predicted they will increase the payroll budget by 4 per cent in 2024.

Salary budgets have failed to keep up with inflation since 2021, and unfortunately for workers, 2024 is predicted to be no different.

Retaining staff

Since the COVID-19 pandemic began, organisations and companies have struggled to retain staff, who have benefited from increased mobility and skill shortages.

“This surge in employee mobility is the result of ongoing low unemployment rates, combined with a post-COVID career rethink, along with the necessity of seeking higher salary opportunities to counteract cost-of-living impacts,” the report said.

Sales, marketing, product management, engineering, science, telecommunications and trade jobs have all been difficult to fill, resulting in increased salaries in those fields.

Last year had the highest turnover in more than five years, with 21.4 per cent of employees moving or quitting their jobs, and that trend has continued in 2023 with a 12.3 per cent turnover rate in the first six months of the year.

Cottrell said “there is simply not the supply to meet the demand” because of a tight labour market.

“We know that for most employees, it’s never been all about the money,” she said.

“With record numbers of people changing jobs, are you giving your talent a meaningful reason to stay, or new hires a reason to join?”

Sixty per cent of organisations reported having difficulty hiring or retaining staff in certain roles, compared to 64 per cent in 2022 and 43 per cent in 2021.

Tech workers saw a hefty pay rise in 2023. Photo: Getty

Changing workplace

Senior management was the big winner in terms of bonuses, receiving incentives as high as 14.8 per cent of their total base salary, compared to 5 per cent for entry-level employees.

Some 25 per cent of businesses reported planning to use bonuses instead of base salary increases to compensate employees without a long-term budget commitment, while 24 per cent said they would provide a cost-of-living adjustment in the most affected markets.

Cottrell said a skills-based model could be the answer to ensuring jobs are filled and suitable employees are found.

“We need to move away from this legacy perception that you can only fill a role by hiring or redeploying someone with like-for-like experience,” she said.

“Resetting the work operating system around skills – not jobs – opens up a powerful new way of thinking about work and talent – both for the organisation and for its people.”

More companies embraced flexibility for their workers, with 83 per cent offering more work-life options for their employees.

The survey predicts the workforce will change again in 2024 because of an anticipated slowing of economic growth, easing inflation and increasing unemployment.