This Christmas season, I bring you good tidings of great joy! No, not the ones proclaimed by the Angelic Host in Matthew, but ones from a recruiting leader on the front lines of the technical job market. I believe that we are at the beginnings of an uptick in salaries for IT and Engineering Professionals.
For purposes of my thoughts here, I am talking about pay raises in excess of 5%. According to the HR consulting firm, Mercer, the average pay increase for employees in 2015 will be 3%. For top performers, it will be close to 5%.
Here are 3 reasons why I believe more significant pay raises will be coming for Technical Workers in 2015 and beyond:
- Improving Economy-While the economy isn’t growing at a record breaking pace, it is much better than it was 2 or 3 years ago. Keep in mind, that we had 5% growth in GDP in Q3 of 2014. The economy is also seeing positive trends in the areas of housing, job creation, gas prices and consumer sentiment.
- Demographic Changes-An improving economy has led to an increased stock market. As I write this, the Dow Jones broke the 18,000 market for the first time. Many people who had put off retiring 5 years are ago are now financially able to do so. This shortage of talent has been particularly painful in the manufacturing sector where an aging workforce exists. There simply aren’t enough young people that choose the manufacturing field as a profession. I recently had one client tell me, that they anticipated losing nearly 40% of their Engineering workforce over the next decade due to retirements.
- Supply and Demand-Employers are hiring again. In the recruiting world, we are now in what is known as a “candidate market.” This manifests itself in our world by counteroffers from current employers and candidates with multiple offers. Employers need to expedite the hiring process or risk losing top talent.
Pay raises are the primary “arrow in the quiver” of employers in the retaining key workers. Employees that recognize this early will be on the front lines of hiring and attracting the best talent.
I’d love to hear your thoughts!