Sometimes taking a pay cut may not be as bad as it seems, especially when there are other positives to consider.
A recent survey of 1,000 Australian office workers, commissioned by Robert Half and published in the 2018 Robert Half Salary Guide, found that a majority (84%) of Australians are willing to accept a lower salary in exchange for more benefits.
Here are a few reasons to take a pay cut where it may be more rewarding for you in the long-term.
1. When you’re making a career change
Many of us choose a career as adolescents, taking advice from world-weary parents and teachers who seem to know best.
Jobseekers can stumble through tertiary education and come out the other side looking for a job that’s very different to the career they had imagined.
So it makes sense that at some point, many candidates come to the realisation that they're in the wrong job and that they are in need of a career change. Perhaps it’s more job fulfilment they're after or greater job satisfaction.
Finding work that resonates with you is rare, so it’s worth looking past the drop in income and celebrating the gains that may come with a new job.
But do your homework before making the jump – what kind of education is required to successfully enter a new career, how much of a salary drop is predicted and which companies would be the most supportive for fresh talent, and may have graduate programs available?
2. When you need flexibility or work-life balance
In the aforementioned survey by Robert Half, flexibility was the most in-demand (47%) in exchange for lower pay, followed by the option to work from home (40%).
Whether you're juggling two jobs or raising young children, finding time can be a make or break factor for a lot of candidates.
This is when dropping a portion of your salary in return for part-time work or flexi-hours can make for a good deal. It's vital that you weigh up the pay cut with the benefits of being around your family more, or being able to hit the surf after a shorter day at the office if that's what you're after.
It could also be that you’re looking for a quicker commute to work. With the costs of urban housing, the lure of living in the suburbs becomes even more attractive.
Working in a smaller company that’s not situated in the buzz of a CBD could pay you better in hours as opposed to a salary, often starting with less time spent on the daily commute.
3. When you need to escape a bad role or company
Are you wearing the golden handcuffs? Sometimes a bad job is accompanied by a healthy salary that’s just too good to give up.
Or maybe it’s a case of the boiling frog – the frog starts off in cold water that is slowly heated to boiling point. It doesn’t jump out because the changes occur so gradually that the perceived danger of staying in the water is not that bad.
Over the years of tenure, a job or company may have changed significantly (for the worse), but those changes have happened so slowly that there’s no motivation to leave.
But now the water is truly boiling, so taking a pay cut may be worth the jump because the new opportunity represents rediscovering happiness. It's not uncommon for candidates to take a pay cut for a new role to escape, and often it can lead to new opportunities and rewards.
4. When you need career advancement
For some jobseekers, particularly graduates, one step back represents two steps forwards in the long term.
In order to move higher up the career ladder, you may need to learn new skills, develop more networking opportunities, gain a little kudos in a new department or be part of a fast-growing company that shows promise in a developing market.
Whatever the motivation, making less money in the short term may not be such a bad pill to swallow if your salary, job satisfaction and experience grow exponentially in the long term.
What to do if you're considering a pay cut
If you find yourself in a position whereby you're open to a pay cut, it's important to know in your mind what alternative compensation you would consider.
When negotiating your new salary, try to sweeten the deal by asking work to cover phone bills, parking, health insurance or education costs, or ask them for a bonus or shares in the company at end of the financial year.
Taking a pay cut isn’t necessarily a bad thing. If there are big gains to be had in other areas, then seeing your weekly wage take a small dent could be well worth it in the long run.
Often greater rewards lie on the other side of the mountain if you're willing to climb it.