Companies post-Covid have become increasingly creative in using non-financial reward instruments to attract and retain their professional workforce. Despite closed borders and unprecedented skills shortages in some areas of the workforce – overall salary increases managed to stay contained around the somewhat habitual 3% level. Workers are appreciating increased flexibility, ability to take longer leave, spend more time with family, exercise more regularly and so on. Executives are still hesitant to demand high increases so as not to disturb the fragile balance of their recovering businesses.
There are a number of factors, however, that are pushing up the remuneration of low-skilled roles at an unusual rate.
The legislated increase in the minimum wage has certainly bolstered the pay for low-skilled jobs. However, it is the closed borders that had the most impact. Lack of seasonal workers is felt everywhere – particularly in hospitality, healthcare and agriculture, but with an overflow into many other areas of the economy. Let’s be honest, many of those jobs are physically and mentally taxing and, given there are now a lot fewer people willing to do them – the competition for labour is high.
Subsequently, the price tag goes up. Salary data for ‘near minimum wage’ jobs is patchy, but here are a couple of anecdotal references: I was advised by the nanny agency that I am unlikely to find someone at $22 per hour and should be looking upwards of $25. I followed their advice. The job has been posted for three weeks now, and we still have no applicants. The agency explained that Covid substantially impacted the number of available candidates. Another example is from Men at Work (www.menatwork.net.nz), who has been trying to fill freezing worker vacancies in Timaru offering a salary range of $80-100K – also with little success.
There are a lot fewer non-financial incentives employers can offer for jobs like this. Nannies don’t get a proper coffee break, nurses can’t take walking meetings to fit in their target 10,000 steps for the day and freezing workers.. well, if you think about what they do day in and day out – there is hardly much room for wellbeing or self-fulfillment. Some roles can, of course, be automated. My kids would appreciate a robo-nanny. However, wide scale automation (and certainly a robo-nanny) are still decades away.
What is going to happen when lower-level, less interesting or ‘woke’ jobs start becoming more and more expensive? Will managers break away from our pre-Covid hierarchical view of remuneration and become comfortable with the fact that their subordinates are paid significantly larger salaries? Previously we saw this in some sales organisations and highly technical or creative fields – but it was the exception. Or will the salary rises start creeping up the hierarchy until we find ourselves in a Swiss scenario with high salaries across the board, “balanced” by the extremely high costs of living.
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