2022: Year of Massive Pay-rises?
One of the biggest fallouts of the “Great Resignation” is a huge hike in starting payment rates for staff.
This year, legal firms could be placing graduate lawyers on starting salaries as high as £150,000. The increases seen range from 15-50%, leading to a fiercely competitive market.
It’s not just starting salaries either. In an effort to improve retention, many businesses are resorting to significant pay-rises to convince staff to stay. Pret a Manger has announced more than £9 million invested in pay rises.
What are the implications of this change? And how can you meet market demand when you don’t have the money to do so?
We analyse our pay data, collected from Croner Reward clients, to give you expert insight and predictions.
What we know about expected pay rises
The market data we are seeing at Croner reflects the predictions made above. In most areas, salaries are increasing. However, certain industries are experiencing bigger pay rises than others—we’ll break this down later.
The main causes of the “Great Resignation”? People re-evaluating their lives and changing careers post-lockdown. We have also seen skill shortages in many areas, including digital roles which has seen a massive increase during the pandemic. This has left many businesses playing catch up with recruitment and considering pay rises to counteract the phenomenon.
Skill gaps have now been historically challenging certain industries, and this became a much bigger problem throughout the pandemic.
Staff shortages and pay rises – most affected industries
Our pay data in this sector shows a 7% increase in wages last year. Also, the industry has seen 45,000+ vacancies during this period.
This is a sector that has seen a skill shortage in recent years, which has only gotten worse during the pandemic. It has resulted in a highly competitive market and rising salaries.
On the entry level, Brexit has also affected the industry—not just Covid. Foreign workers have historically filled in roles in an industry affected by shortage of staff. Post-Brexit, shortages have significantly grown and there are gaps in the market that are desperate to be filled.
What can we expect?
We do have good news on the horizon – rising salaries won’t keep increasing exponentially. After a few months, pay rates will plateau and stay the course for roughly six months before changing again.
Your pay policies will determine how affected you are by the changes. If your policies state that you must pay the median pay for that role, then you will be forced to meet market demand and your business may suffer as a result.
Overall, the key is to be sensible. By using robust, reliable benchmarking data and using a concrete job evaluation process, you can ensure pay is level. This will help you attract the right kind of talent and retain them. It will also help you maintain cost control.
Each individual candidate is different. Ask yourself – is this person worth the top end salary range? If they are, pay it. However, you might often find that an entry-level candidate is requesting a salary that they don’t have the experience or skill set to meet. By understanding where jobs sit within your organisation you can make sure you don’t under or over pay.
Also, don’t be afraid to negotiate salaries and pay rises. Just because a candidate is asking for 15% more than you’ve offered, doesn’t mean you have to pay it. Meet them halfway, or explore other benefits that will help retain staff. Some may value flexible working over a salary increase, for instance.
Ensure your pay rates are accurate
With Croner, you can guarantee that you are paying your staff correctly. As part of your APHC membership you have access to expert advice.
Speak to one of our consultants today for more information on 08445618133 and quote your APHC membership number.