The Great Resignation drives tech wages higher: Can startups keep up?
More than 93% of Australian organisations are planning salary increases for 2022. But startups are struggling to keep up with rising tech wages.
More than 93% of Australian organisations are planning salary increases for 2022, with employees in the tech and security sectors set to receive the biggest windfalls.
That’s according to Mercer’s annual Total Remuneration Survey. But some Aussie startup founders say it’s impossible for them to keep up, so they’re offering other perks to keep talent on board and applying for roles.
Positions with the highest expected year-on-year increases include new media experience design and digital marketing, with a 10.5% and 9.5% increase expected, respectively.
Experienced data scientists or data miners, entry level app developers and entry-level IT security professionals are all looking at around an 8% increase.
The median planned pay increase is 3%, the report found. That’s up from 2.5% in Mercer’s Salary Movement Snapshot report for July and August this year.
These results also come as a stark contrast to last year’s Total Remuneration Survey, which found 80% of businesses were planning on freezing pay as a result of the COVID-19 pandemic.
Now, according to Chi Tran, head of market insights at Mercer’s workforce consulting practice, the crisis has bred market conditions we’ve never seen before.
Hiring and retaining top talent has become more competitive than ever, she explains.
“It’s generating higher-than-market pay, sign-on bonuses and premiums to hire those with critical skills.”
How can startups stay competitive?
For some businesses, however, salary hikes are simply not feasible. That’s led to startups offering new ways to improve employee experience.
“Salaries are seriously high at the moment but as a startup, we can’t just play the arms race,” :Different co-founder Ruwin Perera tells SmartCompany.
Instead, the leadership team focuses on providing value, giving the same consideration to staff experience as to customers experience.
Perera says the most valuable thing a startup can offer staff is equity. :Different team members have three options: high salary with low equity; low salary with high equity; or somewhere in between.
“The best startup employees think and act like owners, and the best way to do that is to make them an owner.”
For InDebted, which recently moved to a four-day work week, offering other benefits seems to be working.
While salary is important to prospective employees, many are also interested in striking the right work-life balance, founder Josh Foreman tells SmartCompany.
The four-day week, plus unlimited time off, equity and stipends to improve home offices “have all led to an increase in inbound applications”, he says.
Tech wages will continue to rise
Anthony Sochan, partner at startup talent firm Think & Grow, says over the past six months businesses found staff retention “incredibly difficult”.
He has seen examples of employees being offered 50% more to join another company. Some employers have matched that just to keep their star performers on board. Others are proactively offering increases to prevent staff from looking elsewhere.
Think & Grow director Jonathan Jeffries adds that there has been a lag in salary increases in Australia over the past five years or so, while local talent is levelling up.
“It’s clear that the demand for talent, which has always been high in the tech industry, will only continue to increase, bumping up salaries and creating more movement of people between companies,” Jeffries says.
According to Ross McDonald, country manager for Perkbox, flexibility is becoming the norm in Australia.
In some other regions, working from home is seen as a privilege. But here businesses have to work harder.
While everyone loves a pay rise, perks and other factors like recognition, team building and wellbeing are also important.
“Have an honest conversation with your team members and you may be surprised as to where it leads,” McDonald advises.
“Have that conversation soon.”
