Low pay rises expected in 2019

The latest CEO Confidence Index has found that two out of five chief executives plan to keep pay levels flat or to rises of 2 per cent, below the already-sluggish rate of wage growth. Average wages rose over the last 12 months by 2.3 per cent, outpacing a CPI increase of 1.3 per cent over the 12 months to 31 March 2019 – this capping off a protracted period of low-income growth

What’s happening?

In the Australian Financial Review (pay wall), Warren Hogan, Chief Economic Advisor, The Executive Connection said: “This low wage growth story has become a macroeconomic phenomena around the world and the RBA is starting to put it at the centre of their monetary policy.”
The survey was taken after the latest Reserve Bank interest rates cuts. 

Reserve Bank Governor Philip Lowe dropped interest rates on 2 July saying that while jobs growth is strong the jobs market would require further stimulus before unemployment could fall far enough to improve inflation outcomes – CPI is sitting at 1.3% over the twelve months to the March quarter. 

While the recent interest rate cuts give CEOs a reason to have a positive outlook on the economy, there is no plan for substantial pay rises as a means of stimulating the economy – meaning businesses are looking employee conditions and benefits to attract and retain employees.
The report found that CEOs are “increasingly adopting new, people-focused programs to tackle their talent challenges” rather than relying on pay rises. These initiatives include flexible working hours, reward programs, employee benefits and career path planning. 

Download the infographic: TEC CEO Confidence Index, September Quarter 2019 

Does this mean I can’t get a pay rise?

Contracts, awards and enterprise agreements and other industrial instruments generally have a salary structure tied to progression in your work i.e. the skills required, and responsibilities of your job.
Because salaries are tied to progression, you could get a pay rise if you demonstrated that your level of progression to justifies a pay rise.

What am I entitled to?

If you're told you're not going to receive a pay rise, you might want to know whether you can challenge that decision. 

Under many contract clauses it is “at the absolute discretion of the employer” whether to give a wage increase, however you may have a right to claim pay rise as a legal entitlement if the pay rise is:

Under and individual contract;
Under a policy; or
Under an Award or enterprise agreement 

Please note: The rules for granting a pay rise may be in a workplace policy, rather than a contract.  It may come as a surprise that the terms of a policy can sometimes form part of an employee’s contract, and that an employee may then be contractually entitled to the benefits under a policy.

Read the fact sheet: Bonuses and pay rises – am I legally entitled to one?