As recruiters, we talk about salaries. A lot. They are crucial – after all, they are the reason most of us work. In the local government sector, something we encounter all too often is regional councils feeling intimidated by equivalent salaries offered by their metropolitan counterparts for similar roles. However, after some research that we will share with you, we would argue when these salaries are taken into an affordability context, the value in regional councils outstrips their metropolitan cousins.
Differences in council salaries
For those unfamiliar with how Local council’s salaries work, councils operate under their own EBAs which classify salaries on a Banding system from 1 through 8. Anything higher than an 8 is classified as Executive level. While councils must pay at or above the Local Government Award, banding will vary between councils. Typically, Metropolitan councils in closer proximity to the CBD have higher salary bandings. This means that usually someone at a Band 6 level in a metropolitan council will be paid more than a Band 6 level employee at a Regional council, despite being at the same pay grade.
Are regional councils at a disadvantage?
At face value, this might seem as if regional council employees are at a disadvantage. We encountered this sentiment recently when we took in a role for a regional council in a beautiful part of Victoria. Despite an attractive locale and potential for excellent career development, the role was below market average, in fact, $10k lower than an identical role we had previously worked on for a metropolitan council the previous month.
After encountering this feedback, we decided to undertake some research in order to have a better understanding of the differences between council salaries.
To do this we created an affordability index. We started with what we would consider the ‘average employee’ – whom we decided was someone at the middle of the Band 6 level (City of Melbourne was an exception as their banding system is different so we used a Class 5). We imagined that this ‘average employee’ also lived in an ‘average Australian home’ – which the ABS states is a 3-bedroom house. We then found the average house price in the suburbs that each council office is located in. Using this information, we could then see how the hypothetical ‘average employee’ would fare across each of the 79 Victorian local government municipalities.
Of course, our research wasn’t perfect; as we weren’t able to acquire the salaries information of Band 6 level for 5 councils (Towong, Mildura, Mansfield, Wangaratta and Yarriambiack) and some postcodes in regional areas have not had sufficient house sales or rentals for the data to be recorded on realestate.com.au – which was how we determined average house price(this also included Melbourne City where we had to substitute a 3-bedroom house for a 3-bedroom apartment).
The results are below;
The difference between the highest (Yarra City – $99,671) and lowest (Alpine – $76,250) paying councils for the average employee was $23K, although discounting these two extremes, salaries were typically all clustered around a $10-15K variance. Housing prices range between locations from Stonnington Council (Prahran – $2.25M) to Buloke Shire (Wycheproof – $0.125M). With far larger variations house prices played a far greater factor in our rankings, with a Band 6 officer’s house in Buloke Shire being only 1.54 times their salary compared to a Band 6 officer in Stonnington who would need close to 15 times their salary to purchase a property in Prahran.
In our rankings below, house prices were the dominant factor to salary with Melbourne’s affordability problems, meaning that Metropolitan councils took all the least affordable spots with only Queenscliffe coming in 15th and Geelong coming in 20th at a similar level. Equally the low cost of housing in North West Victoria meant that many of Buloke’s neighbouring councils such as Hindmarsh, Gannawarra and West Wimmera had similar returns on their salary.
We recognise that for some people purchasing a house isn’t something of interest and that some roles are taken as a transient career step, so rental affordability for these individuals was more important than house prices. We, therefore, also calculated how much disposable income an individual would have by deducting the cost of an individual’s annual rent in an area from their annual salary. We appreciate that this figure is before tax so not a true indication, but it does give a benchmark of a person’s disposable income.
The results in this area were quite surprising and more varied than the housing affordability figures with the frontrunners scattered across Victoria in both regional and metropolitan areas. So, whilst any employees from Hindmarsh Council are the ones that you want to be hitting up at the bar in local government conferences, both Wyndham and La Trobe offered similar levels of disposable income.
We’re uncertain how much value these findings have for Metropolitan candidates compared to regional candidates. whilst living in the same postcode as your place of employment has its advantages; it can also be a downfall dependant on the area and amount of disposable income.
Many council employees working for metropolitan councils could equally live in the same suburb as council’s head office, or a suburb or two over in a potentially more affordable area without causing inconvenience. This is especially true of the councils which service some of the more affluent suburbs such as Stonnington, Bayside and Boroondara for example.
Based on the above, in our experience candidates who already have a stable home base in metropolitan Melbourne are less likely to view house prices as a factor in their decision making, with commute times playing a far greater part in their decision making. Meanwhile, those candidates open to relocating due to the career advantages in a new role, are often looking to rent in the new location rather than buying so rental affordability is higher on their agenda than house prices.
Highlighting Salary Value within the regions
For regional councils, candidates tend to live within (or close to the municipality), so housing/rental affordability becomes a greater decision-making factor. This is especially true for senior or technical roles where councils often need to import talent and the availability, quality and value of accommodation is often crucial to a candidate, sometimes more so than the role itself.
Promoting the value of their salary in comparison to local house prices though, whilst a potentially good recruitment strategy can be a fine line for regional HR departments as it could potentially alienate existing residents by representing them as coming from a lower socio-economic demographic. Because of this; councils are good at promoting the attractions within an area but shy away from talking about housing, with the expectation that the candidate will do their own research.
In our experience, candidates only start to research an area properly at a second interview or even offer stage. We would suggest that for regional councils we suggest that it would be worth creating an “about the area” document. This document could contain information pertaining to local attractions, travel times to Melbourne or regional centres, local schools as well as basic property information. By combining general information about the area with property prices this would enable a council to promote the salary value without alienating its residents. This type of information pack could be sent along with a PD to prospective candidates as a standard part of the application process and in this way, help engage candidates with an area far earlier in the process.
This article is by no means meant to be a Bernard Salt/Smashed Avocado piece, about how younger generations need to suck it up and move regionally to get on the housing ladder. The housing affordability crisis we currently have are forcing today’s generation to consider compromises that I personally didn’t have to consider, and it would be hypocritical of me to preach answers to questions I never had to ask myself when entering the property market.
We do feel, though, that regional councils could do more to promote their salaries relative to the cost of the area. This could potentially help to turn a negative perception into a selling point
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