The COVID-19 pandemic has had a profound impact on global economies and workforces. As businesses, governments, and individuals strive to recover from the crisis, workers in the UK are pushing for better wages to sustain their lifestyles amidst the cost of living crisis. In this article, we will discuss the increase in UK workers’ expectations for a pay rise in the next 12 months and the implications for talent acquisition and retention.
50% increase in expectations
According to a recent study by Wagestream, almost three-quarters of UK workers (73%) expect a pay rise in the next 12 months. This is a significant increase of 50% from the previous year. The pandemic has brought to light the importance of financial security, and workers are increasingly seeking better wages to support their livelihoods.
The study also found that workers in the healthcare sector had the highest expectations for a pay raise, with 81% of respondents hoping for an increase in their earnings. The retail and hospitality sectors had the lowest expectations, with 66% and 69% of respondents, respectively, hoping for a pay raise.
Average uplift in expectations
On average, workers expect an increase of 5.6% in their earnings, which is higher than the average pay raise of 3.6% in 2019. However, only 12% of workers are expecting to receive a pay raise of 10% or more, highlighting the modest pay raise expectations of the majority of UK workers.
The implications of these expectations are huge for both employees and employers. For workers, a pay raise could mean a higher quality of life, improved mental health, and a sense of job security. For employers, not meeting these expectations could lead to dissatisfaction, decreased productivity, and high turnover rates.
High expectations
Although the average increase in expectations is 5.6%, the majority of workers are not expecting pay raises in line with current levels of inflation. The cost of living crisis, accelerated by the COVID-19 pandemic, has led to rising prices for necessities such as food, housing, and fuel. Therefore, many workers believe that their pay raises need to reflect these increased living costs.
Furthermore, the study found that a third of workers have experienced financial hardship during the pandemic. This has added pressure to improve wages to support their families and maintain their standard of living. The high expectations reflect concerns not only for the present but also for the future, as workers grapple with the effects of the pandemic on their finances.
Inflation and Pay Rises
The majority of workers are not expecting pay raises in line with current levels of inflation. The Consumer Price Index (CPI) recorded a 2.5% rise in inflation in June 2021 compared to the previous year. This means that prices are rising faster than earnings, adding to the strain on workers’ finances.
This poses significant challenges for businesses in terms of talent acquisition and retention. Workers are likely to seek better-paying roles elsewhere, leading to higher turnover rates. Therefore, it is crucial for businesses to consider their employees’ expectations and address these challenges to retain their staff.
Implications for Talent Acquisition and Retention
The increase in pay expectations was unsurprising, given the current cost of living crisis and its effects on workers’ finances. Therefore, businesses must take steps to address these challenges and improve their talent acquisition and retention strategies.
Employers must improve their overall benefits package in order to address recruitment and retention issues. This may involve offering flexible working arrangements, parental leave, healthcare benefits, and pension schemes. By doing so, businesses can demonstrate their commitment to their employees’ well-being and create a positive work environment.
Acknowledging Employee Challenges
It is essential for businesses to acknowledge the challenges faced by their staff, particularly regarding financial well-being. Employees must feel supported and valued by their employers, especially during difficult times. Therefore, businesses should offer financial advice and training to help employees manage their money and plan for their future.
Improving Benefits Packages
Improving benefits packages is another way businesses can address challenges posed by high pay rise expectations. This includes offering more comprehensive and flexible packages that cater to the diverse needs of their workforce. For example, businesses could offer employees the option to use their benefits allowance to purchase items that are most valuable to them, such as childcare vouchers, gym memberships, or cycle-to-work schemes.
The increase in UK workers’ expectation of a pay rise reflects the current cost of living crisis and the pandemic’s impact on finances. Businesses must acknowledge these concerns and offer solutions that support employees’ well-being, including flexible working arrangements and comprehensive benefits packages. As workers grapple with the effects of the crisis on their finances, businesses must take steps to retain their staff and remain competitive in the market.