Wage Spiral Predicted To Continue In 2024
Adding to the Bank of England worries, recent data shows annual pay growth for some in-demand roles as high as 36.2%
Unresolved skills shortages, growth-ambitious business leaders and a cost-of-living crisis have all exacerbated the high quit rates of 2023. The result – the highest annual growth in regular pay the UK has experienced in the past two decades.
According to new research by specialist recruitment firm Robert Half, almost a third (32%) of employers are finding themselves in the middle of a wage spiral, having to inflate salaries to maintain a competitive edge in the war for talent. With 69% of businesses confident in their 2024 growth prospects, the need to recruit skilled employees to ensure business continuity and growth still outweighs concerns about economic uncertainty.
The firm’s 2024 Salary Guide – which analyses and reports on market salaries, hiring trends, and skills requirements across the UK – also revealed that a further 26% of companies are offering additional one-off bonuses to keep hold of their staff.
With inflation still an issue for the UK, almost half (41%) of employers indicated that they will offer a flat-rate salary increase for all employees in the next 12 months, while 27% are planning pay increases in line with inflation.
As seen in today’s ONS labour market data, annual average pay rises for private sector employees was 8%, yet a closer look at some of the most in-demand skilled roles reveals a more concerning wage spiral snapshot for the inflation embattled economy. Although across the board salary increases are in line with the ONS results, the 2024 Salary Guide forecast shows the average annual pay growth in accounting operations is up by 9.6% year-on-year, where, depending on experience, roles such as Financial Accountant, Purchase Ledger Manager and Billings Clerk would command 26.4%, 26% and 36.2% higher salaries respectively. A similar picture is seen in financial services, where a Financial Controller can expect 16.2% more; within tech, software development professionals are able to secure pay increases up to 24%; and within the legal professions, the average annual wage increase is 12.4%.
Matt Weston, Senior Managing Director UK & Ireland, at Robert Half, commented: “Many employers may be shocked next year at the salaries that some of their most in demand roles will command. Without careful planning this will weigh heavily on company profitability at a time when businesses are struggling with costs."
“It is no surprise to see financial incentives are perceived to be a top solution. However, continuous pay rises aren’t sustainable and firms need to consider how else they can boost hiring prospects and reduce attrition. With the UK continuing to face significant skills shortages and 75% of employers concerned about the attraction and retention of staff in 2024 according to our research, firms will find themselves with little option but to listen to the employee voice."
“Yet, pay is not the ‘be-all and end-all.’ A robust corporate culture and a tailored retention programme can be a cost friendly strategy. Our research shows, for example, that almost half (47%) of the workforce would reject a new job if the company didn’t offer flexible working, yet news reports continue to highlight brands that are enforcing office returns. And in many instances employees leaving a business do so due to deep-rooted talent attrition causes such as heavy workloads and a lack of development opportunities. Business leaders must address all aspects of the employee experience and must do so fast, since an increase in pay is the inevitable by-product of ‘jumping ship.’