Australia is well known for its strong economy, but the cost of living, particularly in 2022, when inflation is wreaking havoc on society, is very high compared with other countries. Skilled workers, who generally possess tertiary degrees and are more professionally experienced, must be paid a fair wage that reflects their skills, experience, and cost of living.
Companies that do not offer their candidates a fair salary will not attract the best talent to take on their roles. If they do, employees are much more likely to shop for a better-paying position sooner.
Identifying what fair and reasonable salaries are for your skilled workers can be a challenge, particularly when you’re hiring through a professional employment organisation from a country such as the US or UK.
How do Australian salaries compare to the rest of the world?
In a report by the Organisation for Economic Co-operation and Development, Australia has the 9th highest average wage globally, sitting at 30% above the world average.
As of 2019, the average income earner was taking home around $USD58,000, compared to $US44,000 in the US.
The local average salary in Australia is also above that of the UK, Canada and New Zealand.
For skilled workers in Australia, however, it varies. They tend to be higher in most professions in the UK but lower than the average salaries for skilled workers in the US.
A study conducted by Outsource Accelerator compared the difference in salaries for high-skill roles in Australia, the United States and the UK. All figures indicate annual salary in USD.
|Senior Project Manager (12+ years’ exp.)||$102,318||$80,343||$107,890|
|Program director (12+ years’ exp.)||$69,508||$94,623||$145,972|
Labour shortages and increased cost of living have driven wage growth
Things have changed a lot since the pandemic. This year’s Skills and Jobs Summit addressed the key economic challenges in Australia today, namely the labour shortage that is driving unemployment down (currently at 3.4%). However, labour shortages typically drive wage growth up, forcing corporations to offer further incentives in the hope of attracting top talent.
Short talent supply for skilled jobs in Australia over the last 12 months has forced pressure on several industries and jobs, leading to this sharp increase in pay rises. The Australian Bureau of Statistics announced a 2.6% annual rate of wage growth “after three-quarters of consistent wage growth, driven mostly by wage rises across the private sector,” says Michelle Marquardt, head of Prices Statistics at the ABS.
To combat this rapid wage growth, the Australian government has announced key initiatives that aim to promote greater participation in the workforce, for example, encouraging more skilled migrants to acquire 482 visas by increasing the annual immigration intake from 160,000-195,000.
How do employee entitlements compare between the UK, US and Australia?
Like most countries, employers of Australian workers must also consider employee entitlements to be paid on top of salaries. Such entitlements differ to those of the US and UK.
Unlike Australia, paid sick leave and paid annual leave are not compulsory offerings under federal US law. However, many states have mandated paid sick leave and many companies offer paid annual leave at their discretion.
US companies are required to cover 6.2% of their employees’ salary for social security, 1.45% for Medicare, as well as state and federal taxes. In some instances, large US corporations that do not offer health insurance to their employees are subject to penalties.
Employers are not legally obligated to provide pensions or retirement benefits for their employees, though many do provide them with retirement savings plans that contribute to their 401k.
In the UK, full-time permanent workers are entitled to 4 weeks (20 working days) per year of paid annual leave and eight days for paid public holidays. Paid sick leave is not mandatory, but some companies might offer a paid sick leave scheme. An additional 8% of a UK employee’s wage must be paid to their pension scheme.
In Australia, all full-time permanent workers, regardless of income, are entitled to 20 days (four working weeks) of paid annual leave. For some professions, they’re also entitled to annual leave loading of 17.5% on top of their wage.
In addition, workers get ten working days of personal leave per year, which covers sick days and carers’ leave.
Both annual and personal leave are accrued pro-rata, but only annual leave gets paid out if not taken.
The number of paid public holidays varies from state to state. In New South Wales there are 11, in Queensland there are 9, and in Victoria there are 13.
By law, all employers in Australia must also contribute an additional 9.5% of their employees’ salaries to their nominated superannuation fund (equivalent to the 401k plan in the US)
Paying your Australian skilled workers an adequate salary will not only ensure they’re able to afford the cost of everyday living, but it will also make your company a secure and fair place to work.
Looking to hire workers in Australia? Speak to Australia PEO about how to remunerate your skilled workers correctly and according to their skills, experience and profession.