Salaries for white collar professionals look to be on the rise in the first quarter of 2022 as companies fight to retain their best staff, a study has revealed.
Analysis of more than 100,000 jobs posted over the last 12 months, carried out for Robert Walters’ 2022 UK Salary Guide, found professional services firms are planning to increase their budget for pay rises by 10 to 15 per cent this year.
According to Robert Walters, this will be the largest increase seen since 2008 and almost three times the inflation rate, with at least 5 per cent of wage increases in payroll budgets being reserved for existing employees.
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For new starters, the past year has seen their wages grow by 6 to 8 per cent, and those who moved into ‘hero’ industries such as technology or healthcare saw pay hikes as high as 15 to 20 per cent.
Similarly, more than two in five (43 per cent) firms said they were planning salary increases for current employees to align with higher pay they have awarded new hires.
Chris Poole, managing director of Robert Walters UK, said that wage increases above market value for in-demand hires was a recurring theme of the past year, and often meant new starter salaries outstripped those of existing employees.
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But, he warned, this could lead to existing employees feeling their additional experience at a company is no longer valued or has not grown in value over the past few years, and projected that over the next year more companies would raise the pay of existing employees so they were in line with new starter salaries.
The poll found that more than half (54 per cent) of staff said they were expecting a pay rise this year following a two-year salary freeze, while two-thirds of surveyed employees stated they would leave their job if they were not rewarded fairly.
Three-quarters (75 per cent) of employees polled said they were ‘very confident’ about job opportunities in their sector this year.
The 2022 UK Salary Guide also looked at the top three values among post-pandemic professionals, which included excellent compensation and benefits (65 per cent); a desirable bonus scheme (53 per cent); and job security (40 per cent).
Almost two in five workers (37 per cent) also stated that “inspiring colleagues and company culture” was an important factor in staying or taking on a new role.
Values that ranked lower for employees included flexible hours (29 per cent); remote working (22 per cent); and holiday entitlement (20 per cent).
However, the report suggested this might be because more than half (53 per cent) of workers stated they wouldn’t ask about flexi-working in a job interview in the coming year because they would naturally assume it would be offered.
But, with two in five (39 per cent) businesses saying that they were increasing pay to keep up with rising inflation, Poole warned that companies may find themselves in a ‘wage-price’ spiral in the coming year – where higher prices and rising pay feed into each other and accelerate even more.
“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,” Poole said, adding that they are increasingly seeing more companies consider the cost of living when determining the average pay rise an individual gets.
“Businesses will have to decide how much to raise their salaries to keep their employees, while also deciding how much to pass on those costs to their clients and consumers,” he added.
Jon Boys, labour market economist at the CIPD, also told People Management that while employers were using a variety of tactics to attract and retain staff in a tight labour market, they needed to carefully consider their employment offer as a whole.
“They should offer a range of benefits such as training, development and progression opportunities and ensure flexible working options are widely available and advertised during the recruitment process,” he said.