The $1,000 pay rise you should be asking for this year
Mozo research has revealed that Aussies should be asking for at least a $1,000 pay rise this year, simply to keep up with the rising cost of living.
Budgets are tight all around lately, for both Aussie families and businesses. The latest Consumer Price Index (CPI) data shows an increase of 2.1% on the cost of living for Aussies over the past year and financial stressors like the cost of electricity, rising household debt and home loan rate rises have been on everyone’s minds.
Mozo Director Kirsty Lamont said that because of tight household budgets and despite businesses tightening their belts, every Aussie should be asking for a pay rise this year.
“Negotiating your salary can be nail biting for any employee, but regardless of stellar performance, KPIs met or bonuses promised, there is one thing that every employee should absolutely be pursuing, and that’s a pay increase based on the CPI,” she said.
“Wage growth in Australia has been relatively stagnant for a number of years and it’s undeniable that the cost of living continues to soar. A browse through your local supermarket all but confirms that. If your wage fails to grow year on year, you’re the one who is swallowing the rising costs of food, transport, housing and other every day costs.”
For the average full time worker, a pay rise to keep up with CPI would mean an extra $90 each month - a 2.1% increase on the average before-tax salary of $63,000. ABS data shows that in fact, wages grew just 2.1% over the past year, meaning many Aussies are just keeping their heads above water when it comes to keeping up with the cost of living.
While an extra $90 a month may not seem like a budget-breaking sum, keep in mind that this is the bare minimum required to cover the rise in everyday essentials like groceries, rent, transportation and electricity. Any Aussies going without a nude up in their pay may quickly find it impacting their bottom line.
“Many companies have put a freeze on wage increases due to slow growth or low profit margins. Even if this is the case, you should be pushing for a CPI salary increase, otherwise you should expect less extra cash to play with each year,” said Lamont.
“If you’re feeling uncertain about how to approach pay negotiations with your employee, consider dividing your pay request into two categories - performance based, and CPI.”
Tips for asking for a CPI pay rise
- Know your numbers. If you’ve got a clear idea of what you want and can back it up with figures, that puts you in a good position for asking for a raise. The CPI in Australia is updated every 3 months, but you can find it by heading over to the ABS or RBA webpages. Then all you need to do is add this percentage to your current take-home salary (after tax) and you’ll have an idea of how much you should be asking for.
- Give real life examples. Noticed that your childcare bill has spiked? Or maybe it costs you more to travel to work every day than it did 6 months ago. Giving your boss real life examples of how the cost of living is impacting you and why you need a raise to cover it will help make the request more human and immediate.
- List your achievements. Although the pay rise you’re after is based on the cost of living, it doesn’t hurt to remind your boss of all the great things you’ve done for your company in the past year, just as extra incentive! Whenever you can, try to quantify achievements - put a number to the sales you made, projects you worked on or customer satisfaction you achieved.
And once you’ve got that pay rise, make sure you make the extra cash work harder for you by sticking it in a high-interest savings account! Head over to our savings account comparison table to find the best place for your stash.