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Large companies pressured by salary increases

The resource boom states of Western Australia and Queensland have been hardest hit, with salary increases substantially outpacing the national average at 6.4 per cent and 5.7 per cent respectively.

The Australian Institute of Management’s (AIM) National Salary Survey 2008 (now in its 44th year of publication) was based on the responses of 723 companies, comprising large companies (504 contributors) and small companies (219 contributors).

The Survey revealed further negative fallout from the ongoing skills shortfall, with voluntary staff turnover rates at 13.3 per cent for 2007/2008, up from 12.6 per cent in the previous year and significantly up from the 9.9 per cent rate in 2003/2004.

This amounts to a significant cost for organisations, with nearly one-third (31.4%) of large companies in the Survey estimating that the average cost of replacing an employee is over $20,000. This includes the costs incurred for recruiting, training and operational costs.

As indicated in the Survey, the top reasons for staff resignations from large companies were to pursue a new challenge (in 73.1% of large companies) and to obtain better pay (in 56.7% of large companies).

“While pay is important, clearly there is a need for employers to ensure that employees have the right skills to take on more challenging roles” said Dr Jennifer Alexander, Chief Executive, AIM NSW/ACT.

Indeed, the Survey indicated that in 2007/2008, only 56.6 per cent of large companies have a dedicated training budget while only 55.6 per cent of salaried staff in large companies were reported to have a development plan in place.

“In addition to hefty pay hikes, savvy employers look at creative ways to attract and retain good people. They identify them at the onset and put in a place a career development plan, complete with an extensive training program, to give these employees the skills they need to progress to the next level within the organisation. In this way employees get ‘that great career move’ and employers get to retain high performing individuals“ said Dr Alexander.

Not only has the tight job market continued to push up salaries, it has also caused employers to look offshore for skilled staff.

According to the survey, 38.7 per cent of large companies already employ staff from overseas with as many as 70.3 per cent indicating they would be willing to employ overseas candidates if needed, to cover a skills shortfall. Currently, the most common source of migrant labour for large companies is the United Kingdom (54.1 per cent) and Asia (45.1), with the new arrivals primarily filling construction and engineering roles.

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