Fight for talent drives higher pay increases

Half of UK employers (50%) are looking to award higher pay increases to staff in 2022 compared with 2021.

Some workers may see pay rises as high as 6%, although the expected average rise is 2%, according to Incomes Data Research (IDR). 

The 2% average increase follows 2021’s rise of 1.5%-2%, and 2020’s stagnation at 0%.

Pressure on payroll:

Demand for workers remains high as staffing shortages grow

Headhunting increases due to post-COVID talent scramble

Salary structure ranked as number one reward priority, XpertHR survey reveals

The trend for bigger increases is being driven in part by difficulties with recruitment and retention. 

Three-quarters (74%) of employers said they were finding recruitment either very or fairly difficult, and half (51%) said they were having problems with retaining current staff as a result of competitors offering higher pay.

Sheila Attwood, pay and benefits editor at XpertHR, said: “In order to aid their ability to recruit and retain, organisations are likely to have to keep up with the market in terms of pay rates. 

“For some, this will mean widespread increases across their workforce, while for others there will need to be targeted increases around their flight risks or hard-to-fill vacancies.”

To minimise flight risk, Attwood recommended, employers should reconsider their reward package

She added: “Employees need benefits that meet their current and future needs, as well as a work environment that suits them.

“If your total reward package stands out from the crowd, whether it be for the work environment, benefits mix, or in the opportunities for learning and development, you will be more able to retain your top talent.”