Speak to an expert +44(0)1733 391377

Toggle Sidebar

Employers face sustained pressures following the pandemic. The recently unveiled mini budget gave employers a raft of changes to digest. Planned National Insurance hikes were cancelled, income tax was cut and IR35 reforms are now set to be scrapped in April 2023.

Employers must navigate these changes while ensuring they retain their greatest asset – their people.

Navigating change

While according to Chancellor Kwasi Kwarteng, tax cuts and fewer regulations are designed to put more money in the pockets of employees and mean fewer restrictions for business operations, some are concerned at the cost of these cuts against the backdrop of the cost of living crisis. Balancing affordability with a strong reward strategy is an ongoing concern of many businesses. Businesses need to continually monitor their pay strategy to keep and retain key talent.

Against the backdrop of tough economic times, with reports that the UK has entered a recession, the skills shortage persists. This is a key challenge for recruitment activity over the next 12 months, with job descriptions and employer brand being a key window into the culture of the business that HR is increasingly focusing on to attract the right talent. Two thirds of organisations have reported plans to increase the number of permanent employees in 2022, indicating the expansion strategy of firms in spite of economic forecasts.

Public and private sector pay

Pay is a key factor in keeping and attracting the best talent. While not a motivator in itself, with people primarily being driven by purpose according to research by Dan Pink in Drive, pay levels become an issue and an active demotivator if they are shown to be unfair. Benchmarking pay and accessing the latest data is critical for employers to ensure that pay is set at a competitive level for the wider market and sector. Over 2022, our spring UK Reward Management Survey revealed that the most common pay reviews remained at three per cent, but with inflation reaching double figures, employers are aware that they need to take steps to help employees address these market pressures.

Critics of the mini budget on Friday point out the gulf that is opening up between public and private sector pay. With pressure on the NHS and local government infrastructure, strike action is prevalent in the public sector. Inflation is set to hit 14 per cent later this year as the labour market remains buoyant, following the ‘great resignation’ in the aftermath of the pandemic. Widespread strike action also persists, with the Royal Mail, criminal law barristers, firefighters and rail workers all engaged in ongoing discussions around pay increases falling short of inflationary pressures.

The question of fair pay

11,000 employers are registered as Real Living Wage Employers through the voluntary wage scheme. The Living Wage Foundation urges employers to support staff with the inflation of living costs they are facing, calculated at 10.1 per cent this year, the highest it has been over the last 11 years since the foundation was formed. The figures are based on what people require to live on.

“The living wage is good for employers as well as workers – that’s why the real living wage must continue to be at the heart of solutions to tackle the cost of living crisis.”

Katherine Chapman, Director of the Living Wage Foundation

The cost of living boost underlines the importance of fair pay. When employees feel that they are being treated fairly and paid competitively in the market, this drives forward employee engagement. This also enables other elements of the reward package to shine, such as your policy around hybrid working and other workplace benefits.

Supporting employees

The CIPD points out that the government’s decision on National Insurance contributions may be a “huge relief”, but suggests that this saving could be reinvested back into supporting employees. Our customers were already reporting that they were striving to support their employees amid rising costs before this policy reversal, with some offering a one-off cost of living payment or a second pay review in unprecedented times.

This was especially true in certain sectors where increases in the market were reaching unprecedented levels, such as Construction. Employers were keen to avoid setting this precedent, so supplementary payments and second pay reviews were being explored. We track one off, consolidated payments made outside of the official pay review cycle and our data reveals that 78 per cent have used out of cycle pay reviews to bridge the gap between pay that now falls below official inflation figures and wider market conditions. 85 per cent were anticipating using out of cycle pay reviews throughout 2022.

Opportunity and growth

Employers are also facing a skills shortage, which is exacerbated when it comes to certain roles. Deloitte is among the firms who are expanding, recently announcing that they are hiring 3,500 new consultants to meet the demand for their services. With plans to invest £220 million in digital transformation, technology and advisory skills over five years, the consulting practice has 725 open vacancies for roles including digital architects, machine learning engineers and data scientists, demonstrating the roles of the future and the growth of the tech industry.

Many organisations are looking to upskill existing workforces and focus on early careers roles to train graduates and apprentices and fast-track their development. However, from young professionals to experienced hires, pay will be a key part of finding the right talent and ensuring they stay with the company after they invest heavily in the training of each individual. With increasing market pressures and the changing landscape of roles, HR needs to remain agile and responsive. The question about fair and competitive wages will be a key part of how businesses approach the war for talent.

Accurate and up to date data

Working alongside our customers, we can help you develop thoughtful solutions tailored to your individual challenges. With 77 per cent reporting retention challenges and 81 per cent expecting recruitment challenges in our spring UK Reward Management Survey, pay is a cornerstone of your approach which we often describe as a hygiene factor. Fair and competitive pay is expected, and failure to set this at the right level can exacerbate these employee turnover challenges for organisations.

Our reports are a leading source of UK salary data. We can provide you with the expertise and insights to help make core decisions around pay and reward practices that can weather this economic turbulence. From healthcare to construction, utilities to student accommodation, we can provide sector specific data on your pay practices, enabling you to offer competitive salaries and benefits packages. This data is continuously updated, ensuring that you receive the most accurate pay insights that are relevant to you.

Our Pay Market Trends Reports

Attraction and attrition rates are a key indicator of how well employers are able to operate as the economy shrinks. Robust salary analysis can help you avoid the costs associated with high employee turnover levels. Through benchmarking competitors and the wider market, our Pay Market Trends Reports can help customers offer employees meaningful reward. With over 20 years of research and deep understanding of designing reward schemes that optimise value on both sides of the employer and employee relationship, we can strengthen your approach to reward strategy.

Our reports explore pay data from recent months and years, helping you to understand the latest trends and what will make your approach competitive. The reports contain predicted salary increases over the coming months to help you make evidence-based decisions around your pay packages. With our sector breakdowns on pay and strategic considerations about how organisations target their pay awards, we can help you navigate the increases that suit your business taking into account different inflationary metrics.

Get in touch

Our Pay Market Reports help you get the full picture on pay. We provide up to date pay award data that can support your commitment to rewarding your people and engaging employees, attracting and keeping the best talent. Let us help you attract, retain and motivate your people by getting in touch today.


Related Articles

Read More
Recruitment and Retention

How Employers Can Navigate the Recruitment & Retention Challenges

Following a buoyant labour market as Covid-19 restrictions were lifted, employers are seeing employe...

Explore
Read More
Research, Insights and Publications

How is the cost of living crisis affecting the picture on pay?

Our ‘Pay and Cost of Living Report’ highlights how employers are addressing the cost of living c...

Explore
Read More
Research, Insights and Publications

How can job descriptions help attract and retain top talent?

It has long been accepted that pay is only part of the picture when it comes to how to attract and r...

Explore

Stay up to date

Sign up for briefings on pay benchmarking, salary surveys, reward strategy and statistical updates.

sign up for updates

© Paydata Ltd 2024 All rights reserved.
Registered in England no: 3632206
VAT no: 728 0808 28

Paydata Ltd, 24 Commerce Road, Lynch Wood, Peterborough, Cambridgeshire, PE2 6LR