A financial expert has revealed how working Kiwis can get a pay rise during a recession.
It comes as New Zealand was plunged into a technical recession last month after the economy shrank two quarters in a row.
Gross Domestic Product (GDP) fell by 0.1 percent in the December 2023 quarter, and in the three months to September 2023, it was worse than expected, with the economy shrinking by 0.3 percent.
So, what's the best way around asking for a pay rise during a challenging time?
Lighthouse Financials' wealth director and financial advisor James Blair spoke with Newshub, and said most of his clients "lack a plan when it comes to pay raises".
"Usually, the expectation is a pay rise that keeps up with 'inflation' or 'my value in the market'," he explained. "Truth is, those reasons don't drive significant pay raises; adding value does.
"Our advice to clients is to sit down with your manager and ask the question: 'In order for me to get a pay rise of $x,xxx, what do I need to achieve?'"
"The outcome should be a structured plan, with milestones and deadlines for the value you need to create for your employer to justify a pay rise," Blair said.
"The more value you deliver, the more the pay should rise."
Here are his suggestions on how to prepare for a review:
Block out time: Set aside time to do the prep work. Your return on investment (ROI) on time spent could be well worth it. Remember, if you do the bare minimum, expect the bare minimum.
Keep a wins list: Every time you achieve a win over the year, big or small, keep a note on your phone so you can refer back to it during the review.
Link back to key performance indicators (KPIs): If possible, try to quantify wins in terms of revenue or any key KPIs for the business. Don't have exact numbers? Use estimations. Show your boss how much value you've added to the business, in metrics that your boss cares about.
Don't rely solely on your boss: It's not your boss's job to remember everything you've done during the year. Take accountability for your own success. Keeping a wins list will help with this.
Not good at negotiation? Email it: If you're not adept at negotiation, send what you want (and why you deserve it) early. That way, you have the time to communicate everything you want without any in-person pressure.
Consider non-monetary benefits: If a salary increase isn't feasible due to economic constraints, explore other perks or benefits that could improve your overall compensation package, such as additional vacation days, flexible working hours, or professional development opportunities.
Research market rates: Look into industry standards and salary surveys to determine whether your current pay is in line with what others in similar roles are earning. Hay's salary checker is a great tool to get started.
Blair's advice comes after it was revealed on Tuesday that the Government MPs will be getting a pay rise.
The Remuneration Authority recommended a 2.8 percent increase every year up until the next election.
For a backbench MP that means an immediate jump of nearly $5000 a year to $168,600, and for a Cabinet minister it's an extra $8000 to just over $304,000.
The Prime Minister's salary will increase by $13,000, from $471,049 to $484,200 in the first year. However the money won't be going into his pocket, with Luxon announcing he will donate it to charity.
