Wages and salaries in the construction sector appear set to remain stuck at around current levels despite record levels of building industry employment, the latest survey has found.

In the 2017 edition of its Hays Salary Guide based on a survey of almost 3,000 organisations, recruitment outfit Hays said two-thirds of all employers throughout the building and construction sector intend to offer either no remuneration increases in the coming year or increases of less than three percent.

All up, 12 percent of employers throughout the sector planned to offer no increases whilst a 54 percent said they would offer increases of less than three percent.

Of those in a more generous mood, meanwhile, 25 percent said they would offer increases of between three and six percent whilst just nine percent would offer increases of six percent or more.

The results come despite massive levels of housing and apartment building activity in east-coast markets continuing to underpin strong levels of demand for new staff.

On a seasonally adjusted basis, the number of people employed throughout the sector in Australia jumped by 45,500 to record level of 1.115 million.

Construction staff numbers have risen by more than 91,500 or 8.9 percent over the last two years.

Despite this, workers throughout the sector have been unable to secure substantial increases in levels of pay.

The most recent data available from the Australian Bureau of Statistics shows that average salary increases for construction sector employees throughout the twelve months to November last year came in at just $26.80 – or 1.7 percent (average male full-time earnings).

Simon Bristow, Senior Regional Director of Hays Construction, said the lack of upward momentum in building sector wages was perplexing.

“It’s really difficult to pinpoint why employers remain cautious on the salary front,” Bristow said.

It’s got nothing to do with staffing demand. The time-honoured supply and demand principle has failed to impact salaries in all bar a few instances. Salaries are also failing to be impacted by rising business activity, which has already increased for 70 percent of employers and is expected to increase further in the next 12 months for 75 percent. And while technology makes workers more productive it’s also failing to impact salary growth.

“I think it has something to do with the lower growth in output prices and a more competitive market where many employers are vying for jobs and so keeping margins tight. I also think that companies are taking a much firmer stance in keeping salaries in check post-GFC and this is having an impact. We are also seeing some organisations pay bonuses, such as on completing projects, which are easier to manage – and retract if necessary.”

Bristow said one consequence of this was growing levels of difficulty for employers in retaining skilled workers.

Indeed, voluntary staff turnover increased in 32 percent of organisations over the past year – a phenomenon he said reflected a test of loyalty amid low salary increases and an awareness on the part of employees about the ability of the current market to deliver good opportunities.

Going forward, Bristow said turnover would likely increase further.

In other findings (across all industries), the report says that:

• Business activity increased for 70 per cent of employers in the past 12 months, while three-quarters (75 per cent) expect it to increase in the next 12 months;
• 36 per cent foresee a strengthening economy in the coming six to 12 months;
• 45 per cent expect to increase permanent staff levels, far exceeding the 11 per cent who say they’ll decrease;
• Meanwhile 23 per cent expect to increase their use of temporary and contract staff, also exceeding the 9 per cent who anticipate decreasing in this area;
• 23 per cent now employ temporary and contract staff on a regular ongoing basis and another 44 per cent employ them for special projects or workloads;
• In the last 12 months, 15 per cent of Australians asked for a pay rise but were declined – a further 17 per cent asked for a pay rise and were successful;
• The success of the latter perhaps explains why 45 per cent say they intend to ask for a pay rise in their next review. A further 24 per cent are as yet unsure;
• 32 per cent of employers say staff turnover has increased in their organisation;
• 65 per cent of employers, compared to 60 per cent last year, are worried that skill shortages will impact the effective operation of their organisation or department in a significant (23 per cent) or minor (42 per cent) way.