Two-thirds of workers thought their last pay rise was unfair, survey finds

Four in five employees say their pay isn’t keeping up with the rising cost of living, as experts urge firms to be ‘more creative’ with their reward strategies

The majority of UK workers felt that their last pay rise was unfair or that it did not reflect their job performance, a survey has found, as experts urge firms to be “more creative” with their pay strategies.

A poll of 1,001 employed adults, conducted in February by CIPHR, found that more than two-thirds (70 per cent) did not feel their last pay rise reflected their job performance. Additionally, 64 per cent said they felt it was unfair, and 59 per cent said it was not in line with the market rate for their role.

Nearly four in five (78 per cent) employees also said their most recent pay rise did not match up with the rising cost of living in the UK, with women more likely than men to report this (83 per cent and 72 per cent respectively).

Claire Williams, chief people officer at CIPHR, said that employees wanted to feel financially rewarded for the effort that they put in, warning that feelings of being underpaid or undervalued can impact productivity, engagement and job satisfaction.

“While employers might not be able to match spiralling inflation, they can perhaps look to increase other discretionary benefits and incentives, which may help mitigate feelings of unfairness and increased turnover,” she said.

The poll found that workers who felt their last pay rise was unfair were twice as likely to consider changing their employer within the next year than those who did not (44 per cent compared to 25 per cent).

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A third (34 per cent) of respondents said a pay rise of 10 to 14 per cent would make them consider switching to a similar role at a different organisation, while 30 per cent said a 20 per cent increase would encourage them to move.

The survey also polled 332 UK employers, and found that half (49 per cent) expected to give employees a pay rise in line with inflation in 2022, which today (23 March) rose to 6.2 per cent: the highest rate in 30 years.

In comparison, nearly a fifth (17 per cent) said they could not afford to give employees a pay rise in line with inflation for 2022. 

Just 4 per cent of employees said they have already received an above-inflation-level pay rise, compared to half (50 per cent) who said they have not yet received a pay rise this year.

The survey also found that 27 per cent of employees said salary reviews were conducted on an ‘ad hoc’ basis, with 13 per cent saying they had to ask for their last salary review.

Samantha Johnson, policy lead at the Chartered Institute of Payroll Professionals, said payroll departments were “no longer just about pay”, and that staff were looking to their employers for more than just their salary. She urged payroll professionals to be “more creative with their pay strategies” to help employees maximise their pay while keeping labour costs “realistic for the business”.

“Implementing options such as salary sacrifice, holiday purchase schemes and linking with discount providers are all options to help employees make their pay go further and continue to attract and retain the best talent,” she said.