Most (70%) businesses in Australia, are planning to increase salaries for existing staff this year, according to research from Robert Half Australia.

Robert Half’s research found that for many companies, residual revenue loss from 2020 combined with lingering economic uncertainty is causing wages to flatline, with national wage growth forecast to be a1.5% for the year ahead, according to data from the Australian Treasury.

Despite the stagnant wage climate, Robert Half found that skills shortages are putting pressure on corporate wage strategies, particularly as the pool of available talent is diminishing as workers choose the security of staying with their existing employer and stricter visa requirements stem the flow of foreign talent.

Roughly over four-in-five (82%) of Australian businesses are concerned about losing their top talent due to the impact of Covid-19.

As part of an aggressive recovery plan, 70% of businesses are continuing to offer salaries at higher-than-pre-Covid-19 levels to retain talented staff with crucial skills for post-pandemic recovery.

Almost one-third, or 32%, of companies planning to increase salaries for existing staff this year, say they will extend salary increases to all employees while 38% say they will raise salaries for top performers. Of those planning to offer a higher salary this year, the average increase is expected to be around 6%, above the forecast national wage growth levels of 1.5%.

Aside from taking steps to retain existing staff, attracting new skills is also a top priority for companies. The majority (70%) of Australian companies are willing to increase their initial salary offering to secure new candidates. Of those, 40% plan to increase salary offers for top talent only while 30% will increase salary offers for all.

Meanwhile, 64% of Australian businesses are introducing new non-financial employee benefits to compensate existing staff and attract new hires. Non-financial employee benefits currently being introduced by companies include flexible work hours (32%), health insurance (29%), and permanent hybrid working arrangements (27%).

“2020 was a turbulent year for employment in Australia as the pandemic sent shockwaves through the economy,” David Jones, Senior Managing Director Asia Pacific, said. “As the market shifts into recovery mode, opportunities will start to expand again as companies kick start new initiatives and agendas – a considerable number of these driven by the shift to remote working, business planning and revenue generation, and digital transformation and cyber-security agendas.”

Jones added, “Benefits that support employees’ work-life balance, flexibility of work hours, and hybrid remote and in-office roles are likely to be some of the lasting workplace legacies of Covid-19 in the upcoming jobs landscape.”