Staff  salary expectations fall

Research by specialist recruitment firm Robert Half shows that the tables have turned on UK pay inflation as employees’ expectations on salary expectations fall below employer forecasts.

According to the latest Robert Half Jobs Confidence Index (JCI) – an economic confidence tracker produced in partnership with the Centre for Economics and Business Research (Cebr), employees were expecting an average pay increase of 3.8% in the 12 months from May, below the 4.6% employers were planning to pay in the year from April, based on survey data from the Bank of England.  This mismatch in employer and employee expectations is indicative of businesses budgeting against skills shortages, which continue to impact every sector.

The JCI shows that 65% of staff are still confident they will receive a salary increase in the next 12 months, with a quarter (25%) of those surveyed indicating that they would stay with their current employer if their remuneration packages didn’t change.  “Many workers are also clearly opting for safety and security over jumping ship for better pay.  This ‘Great Stay’ that we’re seeing in the workforce now is further evidence that people are reluctant to move jobs in the current climate,” comments Matt Weston, Senior Managing Director UK & Ireland, Robert Half.

“Employers are acutely aware of the dearth of specialist talent and the impact this will have on the costs of acquiring the skills of the future in the domestic employment market.  But with the skills shortage further reducing talent pools, employers are going to have to work harder to attract the core staff they need, and pay isn’t always going to cut it as a solution.”

However, the JCI data reveals that, of those expecting a pay rise, an uptick of 5.1% was projected.  These are likely the workers operating in sectors where skills shortages are particularly acute and who can command higher rates of remuneration as a result.  This is further evidenced by the fact that those with degrees expect a 4.4% pay rise, compared to those without (2.8%).

The latest iteration of the JCI demonstrates a fall in the number of people expecting a pay rise, with statistics suggesting that workers are favouring job safety and security over pay in the current economic climate.  The data revealed that a quarter (25%) of those who expect a pay increase would take no action if this wasn’t offered.  While 20% would consider changing employers for better pay, others are instead opting for alternative money-saving options as the cost-of-living crisis and economic uncertainty continue to impact households.  Just over 16% stated that they would reduce spending on non-essentials if they did not receive a pay rise, while 13% would look for additional sources of income such as a side hustle, and 7% would relocate to an area with lower living costs.

“Wage inflation hasn’t fallen as expected, but what is perhaps more notable is that the fall we have seen hasn’t translated into a positive impact for people’s wallets,” continues Weston.  “The cost-of-living crisis is still very much prevalent in the UK and workers are feeling the pinch, hence the large number hoping for pay rises.  However, the uncertainty of the market now means that many are taking a more realistic approach and opting for job safety and security over pay.”