We’ve seen a significant shift in pay trends over the past decade, impacted by economic downturns and inflationary pressures. With high levels of uncertainty in the job market and increased recruitment competition, HR teams need help.
Understanding salary trends, and monitoring future pay trends in the UK, will give HR professionals the market insights they need to attract and retain the best people for their business.
Like many other countries, the UK has seen a recent surge in inflation, leading to an increased cost of living and escalating costs for everyday essentials, like energy, food and housing.
This would be all fine if pay rises weren’t struggling to keep pace with inflation.
Many employees are raising concerns about being able to afford basic necessities - putting more pressure on HR teams to get salary reviews right to support their people.
Balancing compensation strategies is a priority - to stay competitive and retain and attract talent - while juggling tighter margins.
The impact of inflation is clear. While wages in the UK grew by around 7.8% in July this year, when you adjust for inflation, real terms growth was only 0.6%.
To stay competitive, HR teams need to monitor salary trends and anticipate how pay will continue to evolve.
In this blog post, we’ll tell you what to expect to prepare for 2024.
Over the last 10 years, wages have struggled to keep up with the rising cost of living for many UK professions.
While average pay has seen a gradual but steady increase, factors such as increased living costs, changes in labour markets and various government initiatives have had a direct impact on wage growth.
According to the Office for National Statistics (ONS), the average weekly full-time earnings have risen from £517 in April 2013 to £664 in September 2023. While this represents an increase of almost 30% in 10 years, it’s not been uniform across all sectors or locations. And it doesn’t account for the rising cost of living and inflationary pressure.
Industries such as technology and finance have seen more substantial salary increases compared to more traditional sectors, which are still falling behind. There are also regional disparities, with London and the South East generally seeing higher average salaries than the rest of the country.
Understanding average salary levels for specific industries and salary recruitment trends gives HR professionals powerful information that they can use to build the right teams.
Just as important in the current economic environment is salary transparency.
Being upfront and honest about salary levels helps potential employees determine if the salary levels align with their expectations before they apply for the role—saving time and money for everyone.
While rising inflation doesn’t necessarily affect all your employees the same way (with some households finding it easier to cut back on spending than others), it’s still putting increased pressure on the cost of living for many.
This year between April and June, saw the highest regular annual growth rate since 2001. But while wages are currently growing at a relatively fast pace, high inflation is cancelling out this wage growth. This has led to negative growth in real terms during 2022 and early 2023.
According to global advisory, broking and solutions firm Willis Towers Watson, just over 70% of UK employees cited inflationary pressure as the main driver influencing changes in salary budgets.
One way to ensure you’re setting the right salary budget that considers the current rate of inflation is by analysing salary trends in the UK market in real-time.
Some experts predict that salary budgets will decline in 2024 after peaking in 2023. According to our annual Pay Planning Survey conducted this month, UK employers are budgeting for an increase of 5%.
While this number is lower than the average increase this year, it’s still well above the 2.8% salary increase budget in 2021.
So, what does that mean for your organisation?
With continued uncertainty around inflation, there’s more pressure for HR teams to make the right pay decisions - to retain talent and attract the best people to succeed.
Pay rates and trends move daily.
Job availability, the number of suitable candidates, and the availability of skills can all influence salary levels.
So, how do you ensure you’re paying your people in line with the market when things change quickly?
Let’s explore why:
All of this means that salary surveys are essentially out of date before you’ve even downloaded them.
To make informed data-driven decisions, HR teams need access to live data in real-time to support their organisations' growth. Giving you the best insights into market shifts to stay competitive.
Our platform provides access to salary information for any job title in the UK - in just a few clicks. You can monitor pay trends and make accurate pay decisions.
If you're interested in learning how to make better pay decisions with Pay Tracker Live, book a demo today.