Pay rise expectations skyrocket amid increasing costs of living, ADP reveals

Pay rise expectations have skyrocketed according to the findings of a new survey of over 1,400 Australian workers. The ADP® Research Institute’s People at Work 2023: A Global Workforce View, found that in Australia, more than half (58%) of workers are anticipating a salary increase in the next 12 months – with an additional 26% expecting a promotion. 

What were the findings of ADP’s survey?

On average, almost half of Australian workers (49%) surveyed expect an uplift in pay of up to 6%, with over one in 10 (13%) surveyed expecting to receive a pay rise of 10% or more.

Alarmingly, almost half of workers (49%) feel that they are underpaid in their current roles and over half (58%) are not satisfied with their salary. The findings come amid the ongoing cost of living crisis and as workers in many countries show a willingness to take industrial action in order to force their employers to be more generous on pay and conditions.

The desire for a pay rise is strongest amongst millennials, with two-thirds (66%) of 25-34 year olds expecting a pay rise in the next 12 months. Amongst industries, IT/Telecom (70%), construction (67%), and manufacturing (66%) have the highest rates of expectations.

Demands for higher pay come after just over six in 10 Australian workers (65%) were given a pay rise last year. Those pay rises averaged 5%. Given that the IMF global inflation forecast for 2022 was 8.8%, even the increase in pay equates to a pay cut in real-terms for the majority of Australians. The survey report also explores employees’ attitudes towards the current world of work and what they expect and hope for from the workplace of the future.

What do the findings mean for employers?

Kylie Baullo, Managing Director ANZ at ADP
Kylie Baullo, Managing Director for ANZ at ADP

Kylie Baullo, Managing Director ANZ at ADP, commented: “Employers have the difficult task of weighing up the expectation for higher pay against their own challenges around rising costs and tightening profit margins. Workers are confident that they will get a pay rise from their current company – but if not, there’s a strong sense that they’ll be able to secure one by moving jobs. The implications for talent acquisition and retention are substantial.”

“Employers who aren’t in a financial position to offer decent pay rises need to carefully consider the risks and start thinking creatively about how to retain staff in other ways, like offering workers more value through skill development and training and increased flexibility.”

“With workers and working families experiencing the highest increases in cost of living in over two decades, it’s no surprise employees expect their pay to keep up with the ongoing crisis.”

“Workers across lower and middle-income bands have found that their disposable incomes have been severely hit. Spending on essentials, let alone luxuries, is being tightly squeezed as they grapple with rising rents, increasing interest rates and escalating food and energy bills. Even if inflation has peaked, it looks like it will take time to return to comfortable levels.”