Money on the mind: Pay rise or a new job?

• 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.

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.

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.

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.

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.

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.’”