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Can you expect a pay rise in 2010?

Salary in 2009
© Myadria |

For many people, 2009 was a tough year. In a time when many companies were forced to implement hiring and salary freezes, as well as cut staff, most people were thankful to have jobs at all – even if that meant forgoing the usual pay rises and bonuses.

But now that the economic and employment situations are starting to show signs of recovery, what can we expect for 2010?

While most workers have ratcheted down their pay increase expectations in the wake of the economic downturn, a recent survey by the Melbourne Institute shows that Gen Y workers (those between 18 and 24) still expect their salaries to increase by almost 10 per cent this year – which is a lot more than the average 2.9 per cent rises expected by workers in general. Those aged over 50 years have the lowest expectations, anticipating only a one per cent increase over the next 12 months. Overall, 34 per cent of Australians expect their net pay to remain the same over the next year, while 8 per cent expect their annual salary to fall.

There’s no doubt that employers are feeling much more confident about the economy and salary increase projections have increased for the coming year compared to 2009 – but these increases are still well down on previous years. It seems that the expectations of Gen Y may be a little unrealistic, at least for the coming year.

The year that was

Australia’s average base salary increase for 2009 was 1.71 per cent, with 37 per cent of companies freezing salaries from late 2008 to mid-2009 – compare these figures to the pre-GFC levels in August 2008, when average base salary increases were greater than four per cent, with only two per cent of companies freezing salaries. Thirteen per cent of companies actually cut salaries during the last year.

Levels of salary increase depended on industry. Financial and insurance services were particularly hard hit, experiencing only a 2.1 per cent rise over the year to September compared to 4.5 per cent in 2008.

Manufacturing also decreased from 4.5 per cent to 2.1 per cent over the same time, and mining’s wages growth plummeted from 6.7 per cent over the year to June 2008, to 3.7 per cent.

The Melbourne Institute has also reported that labourers and plant and machine operators suffered the worst pay growth in the last year as a result of the weak labour market.

To make matters worse, in July 2009 the Australian Fair Pay Commission left minimum wage rates untouched instead of according them the usual rise.

What to expect in 2010

According to a survey by Hewitt Associates, base salaries are projected to rise only slightly in most Asia-Pacific markets during 2010 – although they will be an improvement on the 2009 rates. The average base salary increase projection for 2010 for Australia is 3.01 per cent, compared to the global average of 2.88 per cent.

Salary freezes are set to thaw significantly. The number of companies freezing salaries is expected to plunge from 37 per cent in 2009 to 12 per cent in 2010. For companies with frozen salaries, 23 per cent planned to unfreeze them by the end of 2009.

If you were one of the unlucky ones whose salary was reduced, there’s a good chance this will be righted in 2010. Sixty four per cent of businesses plan to reinstate salaries back to their original levels and award base salary increases on the original, unreduced salary levels.

Not everyone will receive the same pay rises, however, even within the same company. By far the majority of organisations use variable pay programs, rewarding high performers according to individual performance. Companies realise that it is the high performers who will help lead them into recovery, so despite ongoing financial pressure, talent continues to be wooed and rewarded with special incentives.

Although many companies still can’t afford big pay increases for their staff, other perks can compensate for a lack of wage rise – such as more flexible working hours, extra training or study leave.

So if you failed to get the salary increase you expected last year, hang tight and don’t lose heart – 2010 is likely to be a better year for most employees.

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