Projected salary increases in the UK for 2015 are estimated at 3%, according to the Global Salary Increase Survey from talent, retirement and health solutions business Aon Hewitt. While this represents a slightly more conservative outlook than the 2014 summer projections of 3.1%, it is still consistent with the trend of the last three years in which salary increases have been stable at around 3%.
However, companies are more cautious regarding salary increases compared to 2014’s winter update. The number of firms considering salary freezes has risen by 6% in 2015. Meanwhile, the number of businesses planning to increase recruitment activity has gone up by 3% (in total 26.8%) and 2.6% fewer companies state they plan to freeze hiring (in total 1.8%).
The number of companies planning to lay off staff has decreased by 4% compared to last year and 78.5% of firms say they do not plan any redundancy activity in 2015. ?
Andrew MacLeod, head of pay research at Aon Hewitt, said: “The UK economy has been growing for the past two years and that increased stability is feeding through into salaries. While employers are by no means letting wages off the leash, they have been able to keep salary increases more or less stable – more so than in many other economies in western Europe.
"Couple this background with the recent Office for National Statistics (ONS) announcement of 0% inflation – the lowest on record – and it will have a significant, real-term impact on employees’ take home pay.”
MacLeod added that any significant drop in salary increases in the UK is unlikely, especially when taking the recent positive development in the economic environment into consideration. By contrast, France and Italy have continued to record more significant drops in projected salary increases than recorded in the report conducted in the summer of 2014.
"It's not entirely surprising that some UK companies are behaving more cautiously on pay budgets – there is still a great deal of ongoing uncertainty in the Eurozone and in other major global economies. However, as unemployment continues to fall and as the economy continues to pick up, we can expect to see upward pressure on pay budgets as companies start to compete again for the best talent,” MacLeod said.
The survey, conducted in January this year, contains data from 560 companies representing 5,390 employers across 31 industries and 121 countries. The data for the UK covers 215 organisations across all sectors and sizes.
