The Salary Squeeze
“The squeeze on workers’ living standards is already severe.”
This year, a substantial majority of workers expect their pay to shrink. As a result, expectations of pay increases are low, with very few workers predicting their pay to rise by 5%.
Similarly, employers expect to increase pay by more than employees expect them to, with almost half planning to raise salaries by more than 5%. It now seems certain inflation is going to be even higher than expected, therefore, this will be a key question for the year ahead.
Total Jobs, one of the UK’s leading job boards, have released new statistics surrounding navigating the rising cost of living. Pay increases, pay decreases and the cost of living all contribute to the current struggle and the inflation that is still to increase. Experts are encouraging employers to acknowledge the situation we’re in and have open conversations with their staff about financial wellbeing and remuneration. This will be vital in retaining and attracting talent for the foreseeable future.
Working within senior level recruitment, this has been a relevant topic of discussion with our clients and our candidates as of late. In this notion, we pulled together some of the key statistics published by Total Jobs:
- Over a third of UK workers say the rising cost of living is compelling the to consider changing sectors to secure higher pay.
- 80% of employers are concerned about the rising cost of living, alongside the 77% of UK workers.
- 30% of UK workers feel their salary doesn’t cover their basic living costs.
- 47% of UK workers consider themselves to be living ‘payslip to payslip’.
- 90% of UK workers have experienced rising work-related costs in the last year.
Why didn’t employees receive a pay rise?
- Employer couldn’t afford to give a pay rise – 35%
- Didn’t know the reason they weren’t offered a pay rise – 19%
- No career progression meant no pay rise – 16%
- Employer prioritised new hires over investing in current staff – 8%
- Weren’t confident enough to ask for a pay rise – 8%
Public Sector and Legal, however, have been listed as number 6 and 7 on the top 10 sectors experiencing salary growth.
State of play
Money is on the minds of employers and employees alike, following the news that inflation in the UK has reached a 30-year high, and is not looking to improve any time soon.
Although the National Living Wage will also rise this year, many people remain concerned about the real value of the money in their pocket, once rising costs are considered. It’s the lowest-income families who will bear the brunt of this. Our research shows that 80% of people from lower socioeconomic background are concerned about rising living costs compared to 74% of those from more privileged backgrounds.
This research really paints a picture of the pitfalls recruitment and retention strategies may endure this year.
Salary predictions for the year ahead
Despite inflation continuing to climb, 40% of employers anticipate that they’ll only offer pay increase of 1-5% over the next year. A quarter hope to raise pay by 6-10% and 15% expect to increase it by 11-20%, and only 13% of businesses don’t expect to increase pay in the next twelve months.
Living costs will continue to rise in the months ahead, which could drive more people to search for work in industries that can offer higher salaries or more holistic job offers. This may lead to a more saturated and overpopulated job market. For employers, this means perfecting recruitment strategies to find perfect candidates for your business, while investing in current staff.
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