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Salary increases thinner on the ground this year

Civil construction skills remain in demand, but tight margins mean salaries fail to reflect this in all bar a few cases.  By Jason Walker, managing director, of Hays New Zealand

There’s no doubt that civil construction remains an active jobs market in New Zealand. According to findings in our 2018-19 Hays Salary Guide, business activity increased in 73 percent of organisations over the past year, with 80 percent expecting it to increase in the next 12 months. One third (34 percent) say our economy will strengthen in the coming six to 12 months.

Underpinning this are our growing cities, largescale demolition and vertical commercial construction work in Wellington and seismic projects in both Wellington and Auckland.

This activity helps account for expected headcount increases in the year ahead; 53 percent of New Zealand employers intend to increase permanent staff levels and 18 percent temporary and contract staff.

However, labour supply has been an ongoing issue across the country for some time. It should therefore be no surprise that 78 percent of employers say skill shortages are likely to impact the effective operation of their business in either a significant (33 percent) or minor (45 percent) way. Perhaps this is why, in skill short areas, 69 percent would consider employing or sponsoring a qualified overseas candidate.

In particular demand are civil engineering professionals thanks to a continuously increasing population.

Roading engineers, transportation engineers and geometric designers and engineers will remain in demand for new or upgrade road network projects around the country. Civil Engineers with land development experience and registered surveyors will also be sought nationwide.

Environmental engineers and those with ‘three waters’ experience will be needed in response to new land developments and roading projects, while the shortage of Civil 12D Designers will remain.

Civil tradespeople are in demand too, especially ticketed machine operators for new subdivision projects and road upgrades. Plant and machine operators with a class two licence or above are also needed, as are certified and CCC approved drain layers and senior concrete cutters.

Salary trends

Given the demand for civil engineering professionals, we expect to see further salary increases in 2018-19 for those in the water, stormwater and wastewater fields, and in transportation engineering and planning.

However, this is an exception to the general trend across the construction sector. Overall, the value of salary increases is falling for many employers compared to their last review.

This is unsurprising when we consider that main contractors and subcontractors now operate with tight margins. Many have reduced margins to win projects.

As a result, when they last reviewed salaries, five percent of employers gave no increases.

In addition, the value of increases for those who receive them will fall. Two fifths (21 percent) of employers intend to increase salaries between three and six percent hen they next review, down from 23 percent who increased salaries at this level in their last review.

And while 11 percent increased salaries by six percent, or more in their last review, just six percent plan to do so this year.

Instead, 64 percent intend to raise salaries at the lower level of three percent, or less, up from 62 percent who did so in their last review.

Our Hays Salary Guide also found that North Island employers are more generous than those in the South, with seven percent compared to two percent respectively intending to increase salaries above six percent.

In addition, 22 percent of North Island employers compared to 18 percent of South Island employers will increase salaries between three percent and six percent.

At the lower level, 63 percent of North Island employers will increase salaries by up to three percent, compared to 71 percent in the South. Seven percent of North Island employers do not intend to give any salary increases, less than the South Island’s 10 percent.

Employer and employee salary intentions at odds

Despite tight margins, civil construction professionals are aware of job opportunities and skill shortages and are more willing to ask for a pay rise.

In fact, our survey results show a pay rise is their number one priority this year and over half of those who plan to look for a new job in the next 12 months cite an uncompetitive salary as a motivating factor. No wonder 55 percent plan to request a salary increase if one is not forthcoming.

Given the disparate salary views of professionals and employers, how can you retain and attract top talent? Apart from a salary increase, career progression, and ongoing learning and development are valued by professionals, which makes upskilling essential to your retention game plan.

After all, with the Fourth Industrial Revolution rapidly gaining ground, automating many job functions and introducing new technologies, constant learning is now a requirement for all workers for ongoing career success.

 

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