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HR faces real-terms pay cut due to inflation, analysis finds

Between April 2021 and April 2023, UK inflation averaged 7.8% a year, a cumulative increase of 16.2%

HR professionals have faced a real-terms pay cut of as much as 8% since 2021 due to the cost of inflation, analysis by HR software provider Ciphr has revealed.

The Ciphr team analysed earnings data from the Office for National Statistics (ONS) and found that the cost of inflation had outgrown HR professionals’ salary growth. 

From 2021 to 2023, HR managers and directors (including the job titles HR director, head of recruitment, and head of learning and development, among others) received a 9.7% pay rise, to £51,617 a year, on average. 

But when adjusted for inflation this amounted to a real-terms pay cut of 6.5%.

Meanwhile, HR and industrial relations officers (which includes job titles such as HR specialist, HR consultant, diversity and equality adviser, recruiter, and personnel officer) received an average pay increase of 8.2%, or £2,262 extra a year.

This was a real-terms pay cut of 8% when adjusted for inflation.

Ian Moore, managing director of HR consultancy Lodge Court, explained that there is a discrepancy between HR professionals' work and their salaries

Speaking to HR magazine, he said: “The discrepancy in pay, especially when considering the increasing demands placed on HR functions, suggests a misalignment between compensation and the significant value HR professionals bring to businesses. 

“These professionals not only help shape the culture and morale of an organisation but also ensure compliance with employment laws, enhance employee performance, and contribute to strategic planning.”

Read more: HR professionals don't get enough training and support, survey finds

A recent survey by recruitment company Michael Page (25 March) showed that 15% of HR professionals have taken on more responsibilities than their predecessors.

Moore noted that HR professionals should be paid in line with inflation and the complexity of their work.

He commented: “Given the critical nature of their contributions, it's essential to re-evaluate how HR professionals are compensated

“Not only should their salaries reflect the complexity and importance of their work, but adjustments should also be made to account for inflation and the cost of living to prevent a decrease in real-term earnings. 

“This is crucial not only for attracting top talent to the HR field but also for retaining experienced professionals who can drive business success.”

Claire Williams, chief people and operations officer at Ciphr, told HR magazine that employers should take into account HR professionals' seniority in their organisation when deciding pay.

She said: “As with any job role, the salary it commands – or deserves – will vary massively depending on the size and type of organisation, seniority and level, and, fundamentally, the strategic contribution that it makes. 

“Any benchmarking should be more focused on the role and business requirements, and breadth of contribution.”

Read more: Highest HR salaries in England revealed

She added that employers should ensure equity between HR salaries and other roles in their organisation. 

She continued: “Given that HR is a predominantly female profession, and considering the heightened focus on closing the gender pay gap, employers should also be mindful about ensuring salaries align – especially when looking at comparable roles at similar strategic levels in the organisation.”

Paying HR professionals correctly would set a precedent for other employees in an organisation, Moore noted: “Appropriate compensation for HR professionals is vital for setting a precedent within companies about the value of all employees. 

“By adequately rewarding HR professionals, companies send a clear message about their commitment to fair pay, employee wellbeing, and the importance of the HR function in achieving business objectives.”

Ciphr analysed the average median hourly earnings (excluding overtime) of 350 UK full-time occupations in 2021, 2022 and 2023 to find which jobs received real-term pay rises and cuts during the cost of living crisis.