Attrition & Retention

Pay Trends Transforming Australia's Consumer Sector

Cost of living growth is putting consumer remuneration budgets under pressure. Learn how HR leaders are staying competitive with a total rewards strategy.

Consumer Sector Organizations in Australia Are Navigating a Perfect Storm

Caught between a skills shortage and a budget squeeze beneath a persistent dark cloud of inflation, Consumer Sector organizations are seeing cost of living pressures impact consumer spending and talent expectations.

With Australian workers reporting that pay is the number one incentive that will make them stay with their employer, it’s never been more important to benchmark your total rewards. In addition to aligning with a competitive remuneration strategy, your approach needs to deliver and retain the right talent for your business strategy.

Here are four trends to consider.

1 Recruit for a Digital Edge in Australia’s Consumer Sector

The need for transformation in the consumer sector has accelerated on multiple fronts, from generative AI technology to resilient and sustainable supply chains, as well as international market penetration.

For example, some consumer organizations are using advanced analytics and AI to predict and minimize supply chain disruptions. The Internet of Things (IoT) is enabling real-time tracking and visibility of goods.

“The race to secure and retain the best talent to fuel this acceleration is well and truly underway,” says Anna McDonald, an Executive Search consultant who specializes in the consumer sector with Korn Ferry working across Australia and New Zealand. She is seeing talent shortages in specialist roles related to technology, data and AI, plus high turnover at senior levels.

“Consumer sector HR leaders are optimistic about revenue growth, but they say high employee costs are a potential drag—and they are cautious about growing their workforce,” she adds.

Every Australian employer in the consumer sector confirmed the skills shortage is still a recruitment challenge. In our Rewards Trends Survey, 63% said competition is another issue: candidates are accepting other offers during the hiring process.

Given IT, analytics and engineering are the three job functions consumer organizations say are most difficult to hire, it’s hardly surprising that these are the functions with the greatest pay differentials—up 4% on the base average across the sector according to our data, based on fixed annual rewards.

2 Pay Growth Is Still Lagging Inflation

An overwhelming 77% of HR leaders in the consumer sector told us their number one priority this year is ensuring their compensation and benefits are competitive with the market.

Our global workforce survey indicates pay is also the top priority for talent. In Australia, generous compensation is the number one reason to stay with an employer, and low salary is the number one reason to leave. Worryingly, 38% also believe their salary and benefits are below the value of their contribution to the company.

So what does competitive compensation look like in Australia?

Consumer sector leaders tell us they’ve awarded 3.5% salary increases in the last 12 months, which includes the mandatory 0.5% increase in super. They plan to provide a 3.7% increase over the next 12 months. However, salary increases have lagged the Australian inflation rate since 2021, eroding the real value of consumer sector wages.

The sector’s pay growth rate is also behind the Australian average increase of 4%, with higher actual pay growth in areas such as mining, utilities and chemicals. This may make it harder to attract and retain those in-demand tech skills.

“We are definitely seeing pay used as a retention measure, with 38% of consumer organizations reporting they will offer salaries above the market, and 25% planning a remuneration review outside their regular pay cycle,” says Lana Simleit, a Senior Client Director focusing on total rewards and work measurement.

“It helps to view employees as people investing time, energy and talent—rather than treating them as costs.”

3 Flex Rewards Beyond Pay

Simleit says she is also seeing non-financial rewards make a difference, even during challenging economic times.

High-performing organizations are moving away from generic reward programs to more inclusivity, with transparent, feedback-driven reward programs. These include personalized career development, workplace flexibility and wellbeing programs.

Australian employees report that flexible work hours are the most important benefit a new employer could offer them, while younger staff are more likely to value learning and development opportunities.

“Think about how your reward programs enhance the employee experience,” Simleit suggests. “It helps to view employees as people investing time, energy and talent—rather than treating them as costs.”

When pay increases fail to keep pace with the rising cost of living, top talent—especially those with in-demand skills—is most likely to leave. Consider rewarding their value across several dimensions, including small base pay adjustments, career development, meaningful job design, new project opportunities, or contribution bonuses.

4 Closing the Gender Pay Gap in Australia

With mandatory Workplace Gender Equality Agency (WGEA) reporting now in place for organizations with more than 100 employees, companies also need full visibility of role-based pay alignment.

“The good news is, our data showed that the consumer market pay gap was smaller than the general market in 2024, at 13% versus 18.2%,” says Simleit. This gap is largely due to the higher representation of men in senior management and executive roles.

To make progress here, companies need to consider ways to improve career path visibility for women. It’s also important to avoid the potential for bias in pay discretion, by keeping pay ranges narrow.

To address this, you may need to analyze your career architecture at a more granular level, with well-defined job grades.

“Once the role tasks, proficiencies and technical and behavioral skills are well aligned, pay should be linked to these elements—not gender, or any other factors,” says Simleit.

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Make Data-informed Pay Decisions for Competitive Remuneration

Employees are struggling with the cost of living, and tell us they’ll jump ship for a better offer. Managing these expectations when every remuneration dollar is under scrutiny is a growing challenge. And it’s even more difficult when you factor in the need to maintain pay equity.

To create an informed rewards strategy that is both competitive and transparent, you need robust data. Korn Ferry Pay can help you benchmark your employee compensation and understand how your offer stacks up in the current market. We ensure you can offer your people total rewards, financial and non-financial, that engage and motivate them to go above and beyond. That’s better for them, and for your business.

Learn how your organization compares when it comes to compensation.