Sluggish salary? Why your recent ‘pay rise’ might not feel like one

Months of persistent inflation have left many Australians feeling that their recent pay raises, when they come, are not enough to offset rising living costs. According to the latest data, the Consumer Price Index climbed 4 percent over the past year, pushing up expenses for essentials such as housing, transportation, and food. Despite this, wage growth has lagged behind, with real wage gains remaining negative even after modest increases. The Fair Work Commission recently raised the national minimum wage to $26.44 per hour, marking an increase of $1.49 from its previous rate of $24.95. This adjustment, effective for a full-time week, brings the hourly rate to $26.44 and the weekly rate to $1004.90. While the change provides slight relief for low-wage workers, economists argue that the increase is unlikely to significantly affect inflation. Nonetheless, the raise is marginally ahead of the Consumer Price Index, offering some measure of cost-of-living support. Charles Liu, founder of promotional merchandise company Cubic Promote, acknowledges that while many professionals have received pay raises, these increases often fail to meet employee expectations. According to the Hays Salary Guide, nearly half of workers believe they are underpaid despite having received a raise. Liu notes that businesses are increasingly tying pay increases to performance metrics, emphasizing measurable contributions, revenue impacts, and productivity improvements. His company, for instance, granted all 30 of its employees a 5 percent raise last year, though Liu admits he seeks clear evidence that such raises are justified. Liu warns that the disparity between high-performing employees and others is likely to widen further. He explains that companies are focusing more on rewarding individuals who drive growth, rather than issuing broad-based wage hikes. This shift reflects broader economic uncertainties and the need for businesses to balance wage increases with profitability and operational constraints. “Businesses still want to reward good people and retain talent,” Liu says, “but wage increases are now being weighed against profitability, operating costs, and economic uncertainty.” Average weekly earnings across Australia stand at $1611, with regional differences ranging up to $200. This figure, however, does little to ease financial strain given current inflation levels. HR consultant Deepak Singh points out that while minimum wage adjustments and award-covered wages are legally protected, many employers treat them as mere compliance exercises rather than strategic moves. “Employers are adjusting the floor because they have to, but many haven’t properly planned what this means for wage compression, internal equity, or their own pay growth story,” Singh says. For those earning above the award rates, particularly in mid to high salary brackets, Singh anticipates minimal changes to existing trends. As automation becomes more prevalent in workplace operations, there is increasing pressure on employers to align compensation growth with productivity improvements. This trend suggests that while some sectors may see incremental wage increases, widespread raises are unlikely unless business confidence and economic conditions improve substantially. Employees seeking better pay options are advised to take initiative. While approaching superiors for a raise is a common step, Liu cautions that success depends on demonstrating value and readiness for greater responsibilities. “Of course, you could make the first move and approach the boss to ask for a pay rise,” he says, “just don’t men.”