The majority of tech workers are set to land a pay rise this year, but it’s unlikely to meet their wage expectations, a new report has found.
The Hays Salary Guide for the 2023-24 financial year, including a survey of more than 14,000 employers and professionals, found that nearly all tech employers will increase salaries this year, with many to offer more significant increases due to the ever-growing skills shortage in an effort to retain staff.
“This year, both the number and value of increases will rise, continuing the upwards trajectory we first noted in last year’s Hays Salary Guide,” Hays managing director Adam Shapley said.
“Despite the increased salary boost, employer and employee expectations in technology still fail to align. Many tech professionals feel undervalued and underpaid. They feel their current salary doesn’t reflect their individual performance.”
The study found that 93 per cent of tech employers will increase salaries in the coming financial year, with the majority to offer increases of between 3 and 6 per cent.
But of the employees surveyed, less than a third said this would be an adequate pay rise to reflect their performance and demand for skills.
Only 12 per cent of employers will offer a pay rise of up to 10 per cent, despite 30 per cent of employees saying this would meet their expectations.
A third of all employees surveyed said that a pay rise of more than 10 per cent would be adequate, but just 5 per cent are likely to receive this amount.
Drivers of salary increases
The survey found that there are four main factors driving salary increases.
One of the primary reasons is the increasing competition for skills and the worldwide talent shortage.
Of the employers surveyed, 17 per cent said they would be offering “substantially higher” pay rises because of this, while just under half said the wage increase would be “nominally higher”.
“Many employers find the pipeline of skilled technology professionals doesn’t meet their needs,” Shapley said.
“As candidate supply continues to tighten, employers face increased pressure to proactively attract and retain talented employees.”
Rising inflation and cost-of-living pressures have also driven an expectation that salaries will increase, with more than 80 per cent of employers and employees saying it is reasonable to expect pay rises to match inflation.
“Employers are sensitive to the hidden cost of falling real wages on employee management, mental health and wellbeing, morale and job satisfaction,” Shapley said.
“While few employers can match inflationary pressures, they are stretching their salary increase budget as far as they can to support their staff.”
The survey also found that 70 per cent of tech professionals are set to ask for a pay rise this financial year, up from 58 per cent last year and 45 per cent the year prior.
“Employees still feel they have bargaining power and are more confident to negotiate for better pay,” Shapley said.
“With skills in demand you still have bargaining power, but it’s important to temper it to avoid pricing yourself out of consideration.
“Yes, employers are investing in salary increases, but margins remain tight. The commercial reality dictates that salary increases can only stretch so far.”
Another recent report by recruiter Robert Half found that some employers are rejecting strong candidates because they are asking for a premium salary, with many tech professionals looking for an extra 16 per cent on top of the initial pay offering, but with just over a third actually receiving this.
And according to Talent’s More Than Money Salary Guide 2023, pay for the most in-demand tech roles will increase by 20 per cent this year, bucking trends in other sectors.