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Happy New Year from all of us at Paydata. As fears of Omicron impacted employer confidence ahead of Christmas but further restrictions were avoided, many will be hoping that 2022 signals less uncertainty for employers and staff looking to define what the ‘new normal’ post-pandemic will look like.

Here we outline the key trends that are on the horizon which should be factored into the plans of all HR professionals over 2022.

WINTER

Consider vaccination take-up

Employers looked to encourage booster take-up ahead of Christmas and we anticipate this will continue into 2022 to protect the wider workforce and reduce the risk to employees’ health. This will become particularly important if cases continue to rise.

There are important ethical considerations to factor into formal decisions around this – in the Care sector, it has been made mandatory given the vulnerability of care home residents, yet in the NHS it is still optional. The UK Government is pressing ahead with plans to require health and social care staff in England with direct, face-to-face contact with patients to have the vaccination by 1 April 2022. In the meantime, employers are able to remind their workforce of the benefits of getting their booster jabs and the benefits of booking their original doses if they have not done so.

General wellbeing will be a key focus for employers in the winter – especially if more restrictions are necessary. Mental ill-health made up half of work-related illness last year according to the Health and Safety Executive. Stress, anxiety and depression have been cited as drivers behind absences and employers will be wanting to continue to support their people. Anecdotally, health sector employers worry that their people may face mental health difficulties further down the line, as they have been dealing with the day to day impact of Covid-19. Therefore, monitoring employee wellbeing closely will be important throughout the first few months of 2022.

Account for the Great Resignation

Greater remote working throughout the pandemic has prompted many to reassess their work-life balance. This coincides with greater business confidence – signalling an increasingly buoyant labour market, which has seen a record number of vacancies being posted at the end of 2021. Some employees anecdotally report that they are less willing to travel and career progression needs to be more widely discussed. Talent management is crucial in determining how successful organisations will be in retaining key skills. Employers are encouraging line managers to make longer-term people decisions, discouraging short-term, reactive decisions. The reward package must be objectively competitive, competing with greater benefits and flexibility offered in a range of sectors. Many are developing leadership programmes to equip line managers with the tools to manage individuals and implement a clear and transparent pay structure – as they are the conduit between the people strategy and its effectiveness.

“Employers are encouraging line managers to make longer-term people decisions, discouraging short-term, reactive decisions.”

During the pandemic, only 22 per cent of respondents to our UK Reward Management Survey experienced recruitment challenges, which increased to three quarters by the end of 2021. Two thirds expect retention issues to persist and three quarters of employers anticipate recruitment issues, signalling a busy market for recruiters as we head into 2022. Employees are, as such, commanding a premium to move roles. Low levels of employee turnover during the pandemic led to fewer employers paying a premium, with only 30 per cent offering new recruits salaries that conflicted with those paid to existing employees in spring 2021. This has increased to 57 per cent offering conflicting salaries to the established pay levels in their organisation in order to secure the right skills and people. 47 per cent are offering up to 20 per cent more.

Overcome skills shortages

There are certain sectors that report a scarcity in the necessary skills they require in their people search. The Labour Market Outlook from the CIPD shows that one in four organisations expect the number of ‘hard to fill’ vacancies will increase in the next six months. Over 200,000 EU citizens left the UK during the pandemic, leaving hospitality and social care sectors struggling to employ enough people. Accordingly, immigration rules are set to be relaxed to attract thousands of additional care workers from abroad, with the offer of a 12-month health and care visa. December figures released by the Nuffield Trust revealed that 40,000 care workers, home care workers and care assistants had left the sector in the past six months. The Home Office has added these roles to their shortage occupation list given the unprecedented challenges posed by the pandemic.

Right to work checks have been subject to temporary guidance since 30 March 2020 to allow employers to check via video or photos, without seeing individuals face to face. Whilst these arrangements might be extended, they are due to come to an end on 5 April 2022. New guidance is expected imminently.

SPRING

Accommodate greater market pressures affecting pay

Our UK Reward Management Survey has run for over a decade and had consistently highlighted how April is the most common month for annual pay reviews amongst organisations. Relatively flat wage growth is persisting – a trend that we have observed since 2008. Pay review budgets tracked gradually rising inflation at two per cent up until 2018, until the combination of economic pressure and rising living costs created an uplift to three per cent. The most common reported pay award for 2021 remains quite evenly split between two and three per cent, with 38 per cent awarding up to two per cent, slightly less than the 46 per cent in spring 2021. In 2022, 47 per cent expect that their official pay review budget will reach up to three per cent – but 37 per cent have indicated they may grant another one per cent as an out of cycle pay increase driven by market pressures, which then skews ‘official’ pay review figures. Employers need to assess whether their pay review process and the resultant budget predictions are robust enough to meet employee needs.

The National Minimum Wage is increasing on 1 April 2022, increasing from £8.91 to £9.50 for workers aged 23 or over, meeting the national living wage. The increase will be from £8.36 to £9.81 for workers aged 21 or 22. Employees will have to review their pay levels to meet these new levels by the start of April 2022 and also consider wider parity of pay across the organisation. These new levels may also impact the pay levels of other roles to ensure that pay bands are sufficiently spaced, reflect degrees of responsibility and do not overlap.

Statutory maternity, adoption, paternity, shared parental and parental bereavement pay rates will increase on 3 April 2022. Statutory sick pay increases to £99.35 from £96.35 on 6 April 2022. There are also plans outlined by the government to introduce statutory carers’ leave and introduce paid neonatal leave. HR will have to ensure they meet these statutory minimums and review all policies that make mention of these rates. However, there will be a limit on statutory redundancy pay from 6 April 2022, which will be published in February.

Champion diversity and inclusion

Employers are increasingly scrutinising their record when it comes to embedding diversity into their practices and wider culture. The business case is unrelenting. In 2020 Goldman Sachs refused to allow companies to go public unless they had one diverse board member and Nasdaq is setting gender and diversity targets for listed companies with binding targets demonstrating how diversity data is no longer a luxury. Ethnicity pay gap reporting is set to be the next corporate governance measure that comes into effect to monitor the steps that companies are taking to be more reflective of the societies they operate in.

31 March for the public sector and 5 April for the private and voluntary sectors – these are the dates for the mandatory publication of gender pay gap figures in the UK in 2022. Organisations will publish reports on their websites and on the gender pay gap reporting portal this year, with no leeway provided to account for a later date of October being allowed in 2021 to account for the upheaval of the pandemic. The narrative will therefore be even more important this year, to set any figures in the context of the pandemic and account for the potential impact of furlough.

SUMMER

Communicate a clear plan around new ways of working

Our UK Reward Management Survey revealed that only 57 per cent had implemented a concrete ‘new way of working’ policy. For many, they will still be defining what this looks like. As the hospitality sector was affected at its busiest time of the year, the Chancellor announced further funds for the sector which by this point will hopefully have helped many businesses to weather the winter storm and thrive throughout the summer in trading opportunities. For others who have enjoyed flexible working throughout the pandemic, a YouGov survey has revealed that half would consider leaving their company if this flexibility was removed. Therefore, agreeing a pattern of work that is fair to all and balances individual preferences will be important for many employers as they head towards a summer where fewer restrictions will be required.

Respondents to our UK Reward Management Survey predicted that by the end of 2021, one in three employers expected to have all employees return to the office but this is likely to have been affected by rising cases and working from home advice in the lead up to Christmas. To date, the expectation was for employees to be in the office around one to two days a week, which is anticipated to increase to two to three days by August 2022.

AUTUMN

Future-proof your business

September is always in step with the opportunities that a new school year presents – there is plenty of scope and opportunity to be setting goals that teams wish to achieve ahead of Christmas. Many take the recruitment drive opportunities that careers fairs and university fairs offer. Now, more often than not, they have been held virtually, but they pose an important opportunity to recruit candidates. Having discussed the importance of diversity and inclusion in 2022, employers that offer careers in Science, Technology, Engineering and Maths (STEM) are particularly active in sourcing talent and challenging gender stereotypes in these fields. This can encourage new talent into the industry, sourcing relevant skills and resources.

CHRISTMAS

Agree your New Year Resolutions

As the end of the year will be in sight, the focus turns to objectives for next year and what will be the trends that define 2023. Keeping track of market fluctuations throughout the year and long-term plans will help with setting the priorities for the year ahead – whether this will be the year that you widen your Equal Pay Audit from a targeted sense check to a comprehensive audit that gives you full peace of mind or whether you examine the foundations of your framework of pay through a full job evaluation system, now is the time that many HR professionals look ahead to the budget they need to ring-fence.

Get in touch

As the market takes shape for 2022, things are evolving quickly. Salary pressures are being fuelled by media reporting and will factor into recruitment and retention challenges for the year. There is value in accessing accurate data which reflects the market to benchmark against role type and sector – ensuring you remain competitive in your reward packages to retain the talent you need to plan ahead and remain agile.

There is also value in sharing and getting a live view on how companies are planning ahead and adapting to the challenges they face, so consider joining us for our sector-specific HR Groups in 2022. We’d welcome the opportunity to discuss your plans for meeting the challenges 2022 has in store.


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