The current cost of living crisis is driving employees to look for a new job as they demand higher pay rises, says recruitment and solutions specialists Hays.

The Hays FY24/25 Salary Guide, which surveyed 15,000 employees, has uncovered the salary and recruitment trends to look out for in the next financial year.

The main finding of the report revealed the number one reason for employees to leave their current employer is the cost of living crisis and their pursuit of a higher paying salary.

Due to the cost of living, there has been a 750% increase in employer’s consideration in determining the value of a pay rise. Meanwhile 77% of employees are looking for a new job in the next 24 months.

“We are seeing a trend of employees expecting higher salary increases over the past three reports,” reveals Hays NZ Managing Director, David Trollope.

“In 2019, 67% of employees expected a pay rise of less than 3%. In just five years the pendulum has swung to 61% of employees expecting a pay increase of more than 3%.” 

The current cost of living crisis has come to the forefront of many employees’ minds as they consider their current situations.

For employers, the number one consideration for a pay rise remains to be individual performance at 84%, followed by responsibilities at 74%, expertise at 53% and organisations performance at 50%.

Read more: Kiwis no longer want to climb the career ladder, survey reveals

But with more and more employees thinking of looking for a new job, the importance of employee retention arises. Especially as New Zealand is undergoing a skill shortage crisis which has intensified in the past 12 months.

“This year, businesses believed that the skills shortages had impacted their workplace with increased workloads (64%), lower productivity (62%) and employee engagement and morale (51%),” adds Trollope.

“Extreme skill shortages of the past year have also eased with 47% of businesses reporting no skills shortage, or minor ones, and one in five reporting that skills shortages have eased.”

Alongside the cost of living, 60% of employees are looking for a new job because of the low prospect of a promotion and 59% say because of poor management and culture.

Despite the call for more pay rises by employees, businesses are showing optimism in the year ahead.

Sixty-four percent believe that business activity will increase in the year ahead, a whopping 55% from the year before. 54% of businesses also say productivity has also increased.

“The extremes of the past few years are stabilising. Skills shortages are easing, inflation is softening and productivity is up,” Trollope adds.

“There is a sense of optimism, yet organisations are still cautious.”