More upward pressure ahead for New Zealand accounting salaries

This article was current at the time of publication.

Accounting salaries are expected to rise further this year, with one recruitment firm predicting “the year of the raise”.

The Hays New Zealand Salary Guide 2022-2023 surveyed 294 New Zealand accounting firms and 243 accountants.

It found 97 per cent of employers will increase salaries at the next review, up from 94 per cent last year.

The majority – 63 per cent – expect to lift salaries by between 3 per cent and 6 per cent. Only 17 per cent expect an increase of less than 3 per cent, while a further 17 per cent say they will offer more than 6 per cent.

The smaller-scale Madison NZ Employment Market Report 2023 predicts less widespread base pay rises. Instead, employers will rely on beefing up non-salary incentive packages.

Inflation driving the market

Hays New Zealand Managing Director David Trollope says inflation and a skills shortage combined to motivate employers to raise salaries.

“In fact, 77 per cent of accounting firms surveyed said they’ve offered higher salaries than planned to attract skilled candidates,” Trollope says.

Some 85 per cent are experiencing a skills shortage and 37 per cent say it has worsened over the past year.

Although 70 per cent believe it’s reasonable to expect pay rises to keep pace with inflation, “few employers can match inflationary pressures, but they are stretching their salary budget as far as they can to support their staff”, Trollope adds.

Madison General Manager Christian Brown notes that organisations in the accounting and finance sector undertook steady, predominantly replacement-only hiring last year, without adding headcount.

Firms finding it difficult to hire permanent staff took on temporary resources via an agency – especially in the government sector, where budget restrictions precluded new permanent hires.

On the good news front

Partner at Gilligan Sheppard Yi Ping Ge CPA believes the hiring environment has now stabilised and it’s easier to find good candidates.

“This time last year and two years ago, people were expecting [a proportion of] staff to go down with Covid, and they started recruiting crazily in anticipation that [the end of the pandemic] would drive business.

“Now, they think that growth isn’t going to happen.”

Ge reveals that in 2021 Gilligan Sheppard lost eight or nine staff, but since then has been able to replace them with people who fit the firm’s culture.

Small firms still losing out

Trollope says although the skills shortage is a universal challenge, it’s especially acute for smaller firms.

“They’re not only competing with larger New Zealand firms and organisations, but also Australian employers, who value New Zealand-experienced candidates,” he says.

Brown doesn’t expect the newly opened borders to alleviate the skills shortage either.

“In overseas markets, New Zealand is no longer seen as attractive as it once was, with our comparative [to Australia] low salaries and high cost of living.”

Outsourcing beckons

However, employers are becoming more inclined to consider outsourcing accounting and finance tasks overseas.

As more employees work wholly or partially at home, having a remote team is becoming more commonplace and accepted.

“An overseas-based remote workforce may be a step further, but it is now seen as a reasonable and manageable solution for some,” Brown says.

Madison noted a higher volume of overseas applicants after the borders reopened in July last year, “but most didn’t have the right type of visa”.

Unique to the accounting and finance sector, Brown also believes that internet-advertised jobs tend to attract an extremely large number of overseas-based applications – up to 50 per cent of all applications, in some instances.

“Migrant job seekers who do relocate to New Zealand will require training and upskilling to meet local employers’ requirements [for example, by becoming a CPA or CA], and we therefore expect learning and development in accounting and finance to be a big focus in 2023-2024,” he says.

Are hybrid roles a solution?

Another recent development within accounting firms has been “hybrid” roles, Brown continues.

Employers seeking to keep headcount at conservative levels have combined and merged tasks, responsibilities and even whole positions.

Some multiskilled candidates who covered multiple positions during the pandemic not only bolstered their experience but became aware of their own increased value.

“Subsequently, we have seen a large volume of optimistic jobseekers with wildly unrealistic salary expectations,” Brown notes.

The full package

With salary budgets already stretched, Brown expects employers to increasingly rely on the positive impact of “the full package”, including a lot of “extras.”

These might include additional leave, early finish on Fridays, health and other insurance.

Trollope agrees that such added benefits can play a significant role. 

According to the Hays survey, the top benefits New Zealand accountants say they want are over 20 days annual leave (58 per cent), training (55 per cent), career progression opportunities (53 per cent), ongoing learning and development (46 per cent), financial support for professional study (41 per cent), and payment of professional membership fees (40 per cent).

He has a few final words of advice for public practice accountants.

“Yes, employers are investing in salary increases, but margins remain tight.

“The commercial reality dictates that salary increases can only stretch so far. So, consider the whole package when you negotiate a new job or your next pay rise – think about the benefits you’d really value that could make a difference to your life and long-term career.”