Money on the mind: Pay rise or a new job?
With Kiwi worried about the cost of living, our experts weigh in on how to pursue better pay.
4 May 2023
Trade Me Job’s Employer & Job Hunter Intentions report found that money is the main driver for moving jobs, with 71% saying pay rate or salary package was what they valued most. In our State of the Nation survey, higher pay was the number one reason to change jobs among all of the age groups we interviewed.
It’s plain to see, the cost of living increases are putting money front of mind for Kiwi.
So, is now a good time to jump ship in pursuit of more money - or are you better off staying put and trying to get a pay rise?
A snapshot of the current job market:
- Salaries are still on the up: In the first quarter of this year, the national average salary reached a new all-time high of $68,316, according to the latest Trade Me Jobs data.
- Employers are still hiring: 80% of employers we interviewed in the Employer & Job Hunters’ Intentions survey said they would be hiring this year. In large measure, this was due to staff churn, which was the biggest reason for recruitment (54%) last year.
- Job hunters are finding new employment: Most Kiwi were finding their next role within two months of starting their search and 87% felt it wasn’t difficult to find a new job.
- Competition for jobs is tougher: Average applications per listing were up 83% year-on-year so it might not be as easy to find a new job as it was in 2022.
- Change is afoot: Trade Me Jobs Sales Director, Matt Tolich, predicts that job listings will fall and salaries will plateau in light of the uncertain financial outlook. When comparing job listings in the first quarter to the same period in 2019, however, vacancies were down by only 7%, a smaller drop than expected, says Matt.
A new job or a raise – weighing up the options
At a time when a recession is imminent and being felt already in some industries, you might expect fewer jobs to be advertised and more applicants to be competing for them. And you’d be right, but there are still plenty of opportunities out there.
But for many employees, the question is going to be, do they try and achieve career progression and get a promotion in their current company or do they find a new job at another company?
And for a number of them, they may not get the positive response they’d like when they ask for a wage rise with their current employer this year, says independent economist Cameron Bagrie. “There are a lot of SMEs, cafes for instance, who can’t afford it, it’s not “economical” for them to pay in line with expectations,” he says.
Sense Partners’ economist Shamubeel Eaqub says the cost of living has gone up more than the average wage, so it’s not surprising job hunters are looking for a better deal. Ideally there will be a career path with their employer and room for their next move but if not, then this might be the impetus for a new job elsewhere.
As well as an improved salary, it’s important to look at what a new organisation is going to give you in terms of training and career opportunities, says Shamubeel.
“It’s not just a mercenary decision if you apply for a new job, it’s about a stepping stone in your career,” he adds.
While money is front of mind, it's important to consider the other aspects of changing jobs too.
Moving at a time of economic uncertainty does come with its risks, warns Shamubeel. Some companies might hire you and then, if they make redundancies later in the year, you might be let go as one of the most recent hires.
“I’m not saying don’t do it, but just go in with your eyes wide open,” he says.
This is why it’s important to do your due diligence on the company you’re applying to. You may think the company is a good bet if they’re hiring, but Shamubeel warns, businesses are usually optimistic until the end.
“Nobody plans to go out of business, they all live in hope,” says the economist, who isn’t expecting a lot of job losses this year, with the latest unemployment rate staying at 3.4% in May.
Do your homework on any potential new employer
Do your research on which industries which may well be hurting at the moment as you cast your job hunting net wide. According to economists, the construction, retail and hospitality industries are vulnerable. Meanwhile, business administration services, automation companies and tech firms have been making redundancies in early 2023, says Shamubeel.
Sorted.org’s Finance Lead, Tom Hartmann suggests you look at any potential new employer closely.
“Look at the industry and the firm, almost like an investor’s due diligence. Would you buy this company?” asks Tom. An investor will want to look at a company’s financial figures, what they’re investing in, their growth projections, and listen to what the market is saying about the company.
Some industries are recession proof, says Tom. Is the company you’re talking to in one of those?
Also really question why you’re leaving your current role.
“They say that people don’t leave a job, they leave a manager. What kind of relationship do you have with the leadership team, with your colleagues? What are the working conditions, the relationships and the environment like?” asks Tom.
In a tighter market, ensure you weigh up the pros and cons of leaving your job.
Economist Cameron Bagrie believes employees should think hard before leaving their current job in the economic climate. “If you’re a smart employee you won’t just be hopping jobs at the top of a cycle for a bit more silver. All of a sudden, it’ll be about job security. If you’re with a good employer do you want to jump to an unknown employer?”
Orange Fox career and life coach, Justine Storey says the grass isn’t always greener.
“Why is this company you’ve applied to, offering more money, and why are they looking for staff? What’s their staff turnover like? Do they need to pay high salaries to get people sometimes? What are the reasons they’re looking for new staff? Growth isn’t always the reason,” she says.
And, before going off to job interviews, have an open honest conversation with your current employer about your position and its remuneration, adds Justine. There’s no risk in doing that.
Negotiating the salary on a new job
If you’ve made your decision to leave and you’re out scouring the job market and attracting interest from employers, make the most of it. There are a few opportunities to make money in your life and a new job is one of these, says Career Space’s Holly Rees, who works with Kiwi in mid-level to executive roles.
When negotiating the salary for a new job think beyond the “honeymoon period,” she recommends. “What salary are you going to be happy with 12 or 18 months into the role?”
“Always aim higher than you’d actually be happy with,” adds Holly. Don’t go in with what you’re going to feel okay with for this honeymoon period. What salary is going to feel sustainable, to make you feel valued in 12-18 months time?
A lot of roles will have a wide salary range. Some managers will want to pay the bare minimum, others will think about future employee retention when negotiating a figure, she says.
Meanwhile, if you were pigeon-holed at your last job and only paid a certain salary, don’t share what it is, when you’re negotiating, advises Holly.
And don’t forget about the job title, that’s important when you’re looking for the next role. The title has got to align with the responsibility of the job, says Holly.
Negotiation is key when getting the pay you deserve.
How to leverage your job offer at your current employer for a higher salary
If you’ve decided to take your job offer back to your current employer to see if it will galvanise them into giving you a raise, you need to tread carefully.
In the current economy, employers are sitting on the fence about offering inflated salaries, our Employer & Job Hunter Intentions report found. And you may find they aren’t able to match the figure set by the competition.
“If you try going back for a counter offer, the thing is you need to be prepared to lose both jobs. You’ve always got to be prepared to accept the no,” says Justine.
At the same time, it’s important to look at your industry and know your worth, from looking at a salary guide, to conferring with recruiters before starting a conversation with your manager, she says. Think about what you can do to bring more value and make yourself worth more.
Go in prepared with: “Here’s the value I’ve added and here’s where I could add more or do something differently. It’s about understanding the business you’re in, the industry and the pain points, and asking, is this a good time to be going for a raise,” says Justine.
What your employer might be thinking when you come to them with another job offer
If you attempt to use this job offer as leverage at your own firm, it can make an employer question just how indispensable you are, warns Sorted’s Tom Hartmann. You get the most leverage when the employer is getting more value out of you, if your role changes radically, he says.
You could volunteer to take on more work at the company but you’d want to make sure there’s paid compensation for this. It should be a clear deal, says Tom.
Acumen financial adviser, Lisa Dudson who works with a lot of small business owners, says their response may be: “Is it worth paying that person more than I can afford?” And where does the money come from?” The company might need to make redundancies or do a restructure to afford the wage rises, she warns.
Employees need to ask themselves, are they being as productive as they can be to ask for that extra pay rise? It’s about explaining how they’re adding value and proving it, says Lisa, author of the newly-released book, Good With Money.
If you want to sit down with your employer about a job offer, have your facts ready, says Holly.
If you’ve been approached about a role at another firm, you can say to your current employer: ‘I’ve been approached about this role. My skill set is commanding this salary in the job market at the moment. Let’s talk.’”
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