Skills shortage prompts construction, engineering pay rises

Skills shortages at the professional/technical job level within the construction and engineering, and manufacturing and technical/trade sectors have led to a rise in wages, according to the Australian Institute of Management’s (AIM) National Salary Survey 2011.

Over the last 12 months, the average pay increase of construction and engineering staff was 3.96%, higher than the sector’s previous 12-month rise (3.85%) but below the Australian average of 4%. This is set to rise to 4.27% in the next 12 months, noted the forecast.

“A tightening labour market, skills shortages and the likelihood of a rate rise all point to a wages blow out if employers can’t find ways to keep good people without big wage hikes,” said David Wakeley, AIM’s NSW/ACT chief executive.

The labour market has also been affected by a larger staff turnover than in previous years, prompting employers to offer pay rises to retain staff. More than 92% of respondents increased salaries to retain staff.

“For the past few years, it has really been an employer’s market but that is changing. Many staff who stayed put during the downturn are now on the hunt for new opportunities and bigger pay packets,” Wakeley noted. “And yes, many employers will have big cost pressures, so savvier employers are seeking creative ways to motivate people, without offering big salary hikes.”

Almost half of the large companies surveyed reported difficulty in hiring staff due to a skill shortage at the professional/technical level and almost two-thirds said they would look overseas for talent if necessary.

Employers have also met the talent shortage issue with extra training and development. The majority (63.2%) of large companies report having a formal training policy, which is up from 58.2% in the 2010 survey. Almost 60% have a set training budget.

By location, Western Australia recorded the highest average salary rise for 2010/11 at 4.7% due to a higher demand for skilled labour than other states.

For more information about the AIM National Salary Survey, visit www.aimsurveys.com.au.