Covid-19 has changed the world as we know it. Quarantine measures and social distancing have turned socialisation into isolation, and on the work front, hopes of climbing that pay ladder has slowly gone down the gurgler.
In the face of corporate redundancies, decreasing staff hours, and businesses shutting their doors completely, simply hanging onto your job is now a good news story.
According to the Australian Bureau of Statistics, 594,300 people lost their jobs in April alone. Another 227,000 jobs lost in May saw our unemployment rate reaching 7.1 per cent, the highest it’s been since 2001. In an attempt to avoid redundancies, many companies have reduced employee hours, and along with it, employee salaries.
So while we’re all about getting yourself a pay rise and earning or fighting for your worth in times like this, it’s important to be armed with vital information on how you can come out on top when you’re asked to take your pay packet a step down.
Companies are choosing pay cuts over redundancies
The simple fact is that many companies are still struggling to hang on, despite government subsidies like JobKeeper. A survey by ABS found that between the first week of March and the first week of April, 24 per cent of people had their working hours (and their incomes along with it) reduced in response to the virus outbreak.
These reductions impacted employees in every industry, from KPMG’s staff who accepted 20 per cent pay cuts to NRL players who faced pay reductions of up to 87 per cent. The proof is in the pudding, this is an era of giving away some of your cake when all you want to do is keep it too. The trick is to know how to hold onto as much of it as you can.
Although no one likes a pay cut, during times of crisis, many companies will attempt to pull different levers rather than make their employees redundant — and reductions in salary are one of those levers.
When I was a financial advisor, I lost count of the amount of skilled executive clients who were asked to take a 20–50 per cent pay cut to hold onto job security during the GFC and, considering the alternative was unemployment, many of them took it.
Negotiating a pay cut to your advantage
You know the saying: it’s the hard times that define you, that when you stay united in the hard times, the good times get even better? Well, it thoroughly applies here. If your company is going through the wringer during the pandemic, and you choose to stick by them, they will support you in the good times too.
Just remember the golden rule when it comes to any employer relationship — tell them what you’ve done, and remind them of this in your review. Use it to tactfully blow your trumpet at the right time and with the right people.
It’ll mean you’re actually recognised for your sacrifice, and reminding them means that they won’t forget to reward you appropriately instead of getting lost in the world of being ‘busy’ (provided they’re the right employer).
Standing by your employer, effectively taking one for the team also builds the ‘professional glue’ highlighting that you’re a team player who understands the bigger picture.
A big caveat to this is, stand by them if you feel what they stand for and their values stand in line with yours. Otherwise, you’re taking a financial sacrifice in addition to an already moral one, and the combination will likely eat away at you with potentially toxic outcomes.
With that in mind, there are some positions where you can still win when you’re losing by negotiating the right kind of pay cut that works for you.
The overall negotiation process is reversed
When you’re negotiating for a pay rise, we usually want YOU to anchor the benchmark price where negotiations begin. However, in this situation, your employer is usually going to be the one give you the anchor and state cut they’d like you to take.
This article was originally written for Yahoo Finance Australia.