This week, the BBC reported that average pay rises are failing to keep up with the rise in the cost of living.
According to the report, regular pay, excluding bonuses and adjusted for inflation, fell 1% in November compared to the same month last year.
For the whole of 2020, and the best part of 2021, business confidence was low. Planning, for anything, let alone financial planning was next to impossible. One in four people were on furlough at some point between March 2020 and June 2021. Many companies experienced a dip in revenues and profits from the impact of the pandemic.
But now the economy is bigger than it was pre-COVID, unemployment is dropping quickly, and job vacancies are at an all time high. If companies don’t look to adequately compensate their employees, then there is a very high risk of losing good people.
Which in turn is putting an awful lot of pressure on companies to raise salaries, especially when you consider that inflation is predicted to reach 6% by the spring.
The two main questions that our clients have been asking us are:
The short answer is, there is no one size fits all answer to those questions. In recent years the average annual pay rise that we see across the transport & infrastructure sectors has been 2.5%, but from talking to our network this year it’s looking more likely to be closer to 5% or 6%.
And then you’ve got the question of distribution. Should the same increase be applied evenly across all employees, or should it be determined on a performance basis? The more junior employees are likely to be hit harder by inflation, so should they receive a higher percentage?
If particular employees have really gone above and beyond, maybe they have taken on additional responsibility or significantly increased workloads, then they should without a doubt be rewarded. If company performance doesn’t allow for an uplift in salary, then look at other benefits such as; shares, additional bonus, a promotion etc. to show appreciation for their efforts.
It’s long been proven that money is never a sole motivating factor, but in today’s candidate led climate, if you aren’t doing what you can to reward your employees then you will lose them.
I’d be really interested to hear what your plans for salary increases are this year.