Whilst the huge increase in living costs may well be at the forefront of employers’ minds, the 2023 Robert Walters Salary Survey Guide has revealed that the average pay increase of 4-6% lagged far behind the latest ONS inflationary figure, and it was the senior staff who benefitted most from the pay increases.
Over three quarters (79%) of professional services firms have reported that they gave their employers a pay rise this January – with the average increase being around 4-6%.
The leading reasons for pay rises, according to managers, were:
- To support employees with the cost of living (46%)
- To aid morale and retention (37%)
- For a promotion, time served, or targets had been met (33%)
The findings come from global recruitment consultancy Robert Walters annual Salary Survey Guide 2023 – which tracks salary predictions for the coming year, as well as surveying 4,000 white-collar professionals and 2,000 employers to identify upcoming workplace trends.
Chris Poole, Managing Director of Robert Walters UK, commented, “Historically, pay rises have been used as a metric to reward hard work, loyalty, or progression. However, what this survey reveals is how truly unique the market is at the moment – where pay rises are now being awarded out of necessity by employers who are fearful of not appearing as a responsible or ethical employer.”
The Robert Walters survey revealed that a quarter of large firms were fearful of public scrutiny if they did not increase wages at the start of this year – with a third of senior leaders admitting that the public-sector pay strikes in December further fuelled the decision of the private sector to readdress pay ahead of the new year.
Pay increases were marginal for less senior staff
Whilst the cost of living may well be front-of-mind for employers, the Robert Walters Salary Survey Guide reveals that the average pay increase of 4-6% lags behind the latest ONS inflationary figure of 9.2%.
That means for the average professional salary of £35,000 – a 5% increase equates to an extra £1,750 per year. With the cost of living increasing weekly by £57 – an annual increase of almost £3k – the average white-collar professional is, in fact, £1.2k worse off in 2023 despite the record number of pay rises.
The same cannot be said for senior managers, executives, and the leaders of an organisation – who have received increases of around 10%, 15%, and 20%, respectively.
For the average senior leader at C-Suite level earning around £75k – they will earn an extra £15k this year if they receive the anticipated 20% increase.
Chris Poole adds, “It really isn’t surprising to see these types of pay increases at the senior end of the market where across all industries, we have contended with an acute candidate shortage.
“In turbulent times, companies often prefer experience over potential, and so the war for talent has been more pronounced at the senior end of the market – with the key attraction in these times being pay rather than company security, career longevity, or the values of a prospective employer.
“Whilst it is tempting to jump at the offer of an inflated salary at another company, we do advise professionals to approach this decision with caution. What goes up will come down. The candidate shortage is pushing up salaries, but companies are also doing a lot of internal training and recruiting at the junior end to help plug this gap in the near future.
“When the candidate shortage levels out – which it will – companies will look at their biggest headcount costs and review whether they need to pay that price point any more. We saw similar happen in the pandemic – where the most cuts were made at mid-management level.”
Companies compensating with benefits
Two-thirds of employers have admitted to being ‘concerned’ about losing primary staff who have received below inflationary pay increases.
To help counter this, employers have increased investment back into workplace culture, the office interior and soft benefits – with the Robert Walters Market Intelligence Team identifying that, on average, employers are spending £280 per employee per month on ‘soft benefits,’ almost double than what was spent pre-pandemic.
Top soft benefit perks include:
- Private Health Insurance
- Medical & Mental Health Assessments
- Travel Insurance
- Social Events
- Subscription Services, e.g. Netflix, Spotify, Hello Fresh
- Training Subsidiaries
- Gym Memberships
- Extended holidays/sabbatical schemes
- Company car/allowance
- Mortgage allowance
- Student loan repayment
- Enhanced parental leave
- Creche/childcare vouchers
- Travel/commuting subsidiaries
Click here to download a copy of the 2023 Robert Walters Salary Survey Guide.
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