Four fifths of employers increased wages in January but only exec pay beat inflation, study finds

Despite an average pay rise of 4-6 per cent, junior professionals are £1.2k worse off per annum

Credit: Alfieri/Digital Visions/Getty Images

Four fifths (79 per cent) of white collar employers gave out January pay rises but only senior leaders secured above-inflation boosts to their salaries, a new study has found.

Research by Robert Walters revealed that although the average pay rise for below-management professionals has been 4-6 per cent, it was still leaving junior professionals £1.2k a year worse off. 

The increase lags behind the Office for National Statistics inflationary figure of 9.2 per cent.

In contrast, the recruitment firm’s annual salary survey of 4,000 white collar professionals and 2,000 employers found that C-suite leaders have received average increases of circa 20 per cent, equating to an extra £15k per annum.

Idris Arshad, people and inclusion partner at St Christopher’s Hospice, said this reflected a growing gap between professional sector leaders and the average employee and needed to be counteracted. “It’s almost expected now but we’ve got to think about the rest of the workforce as when an organisation does give out better pay rises to senior staff it sends a clear message,” said Arshad. “In addition, those who are in more need of money should get more money.”

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Dr Duncan Brown, visiting professor at the University of Greenwich and associate at the Institute for Employment Studies, added that bigger pay rises for senior staff were likely the result of trying to offer competitive remuneration, but that this could result in a hit to company culture. He said: “One charity I work with froze senior pay for four years and are now so uncompetitive on the pay they lost a key director to another bigger charity.

“Yet The Times recently reported that there are concerns that workforce views on pay are not being heard, with it bringing disillusionment and erosion of trust as a result.”

The survey found that two thirds of employers were so concerned about losing staff as a result of below-inflation pay rises that they are now spending £280 per employee per month on soft benefits as a result. Favoured investments here include private health insurance and travel insurance, and workplace culture spending such as social events, as well as subscription services such as Netflix and Spotify.

Employers were also clear on their reasons for any pay increases, with the survey finding that the biggest factor was wanting to support employees in the cost of living crisis (46 per cent).

Other important reasons included the need to improve morale and retention (37 per cent) and for a promotion or for time served (33 per cent).

Meanwhile, previous reporting by People Management found that two thirds (66 per cent) of businesses would consider paying a salary to suit inflation, and more than half (56 per cent) had been ‘open’ to granting pay rises to employees who were no longer financially secure.

However, a Speakers’ Corner survey of 500 UK business owners with at least 100 employees found that while most would consider an inflation-aligned salary boost, only 3 per cent of respondents said they would actually take the cost of living crisis into consideration in pay reviews.