Experts predict that salaries for professionals are expected to increase by as much as 25 per cent in the first quarter of this year - as companies fight to hold on to their best staff and new starters see significant growth to their pay packets.
A study carried out for Robert Walters’ 2022 UK Salary Guide - an analysis of more than 100,000 jobs posted over the last twelve months - has found that professional services firms are planning to increase their budgets for pay rises by up to 15 per cent. This is the biggest increase since 2008 - and almost three times the rate of inflation.
At least 5 per cent of the payroll budgets increase will be set aside for existing employees - however, the biggest pay rises will be reserved for new starters. Rises are expected to be for all levels of workers from entry-level and temporary staff through to management and executives. Of the employees polled, 75 per cent said they were very confident about job opportunities this year and 43 per cent of firms stated that salary increases for existing employees were being planned - to line up with higher pay awarded to new staff.
Chris Poole - Managing Director at Robert Walters UK - stated that a pattern had emerged and commented:
“Wage increases above market value for in-demand hires was a recurring theme of the past year. As a result, we saw new starter salaries outstrip those of existing employees.”
He added that this could alienate existing workers, stating:
“The consequences of this will result in wage compression - where existing employees feel their additional experience at the company - over new starters - is no longer valued or has not grown in value over the past two years. Looking at the year ahead we will see more companies raise the pay of their existing employees to sit in line with new starter salaries.”
More than half - 54 percent - stated that they were expecting a pay rise this year after most places had endured a two-year salary freeze, with two thirds of employees threatening to leave their jobs if they were not rewarded fairly.
According to the 2022 UK Salary Guide, the top three values post-pandemic required by professionals are excellent compensation and benefits - 65 per cent; a desirable bonus scheme - as stated by 53 per cent and job security - 40 per cent. Ranking much lower was flexi hours at 29 per cent; remote working 22 per cent and holiday entitlement 20 per cent. Just over half of white-collar workers said that they would not ask about flexi working in an interview as they assume that it would now be offered. A third of workers stated that inspiring colleagues and company culture is an important factor in staying on or taking on a new role.
Over a third of businesses reported that they are increasing wage rates in order to keep up with inflation.
Chris Poole stated:
“There is little point in companies offering a pay rise as a morale booster if the impact of that increase isn’t really felt in the real world - and so we are increasingly seeing more companies consider the cost-of-living when determining the average pay rise an individual gets.”
But he added:
“Businesses will have to decide how much to raise their salaries to keep their employees, whilst also deciding how much to pass on those costs to their clients and consumers.”
