A combination of increased business confidence, a recovering jobs market and a skills shortage in the UK is putting huge pressure on employers to increase salaries. As a result, nearly one in five businesses are expected to increase pay above 2.5% in 2016.
This will be a huge boost to workers as more than half of UK employees say they are dissatisfied with their current salary. It’s not just employees who are set to benefit from this however. Head of Hays UK & Ireland, Nigel Heap commented:
“Employers who can offer competitive remuneration packages, clear development paths and relevant training programmes will be best placed to attract the top talent required to succeed next year.”
The latest analysis from PwC has also revealed that the FTSE 100 companies that provided details about how much their senior executives are paid and the targets they have to meet in order to achieve bonuses, showed the strongest link between pay and performance since 2010.
The sectors which are experiencing severe skills shortages, such as construction, have already enjoyed substantial pay rises of more than 10% in the last year. Pay for white-collar professionals has also risen by 2.3% this year and more than two thirds of employers expect to increase pay again in 2016.
Across the UK, the biggest salary increases outside of London and the South East were in the South West where wages increased by 2.7%.
The UK Salary & Recruitment Trends 2016 report which surveyed 20,000 employers and employees also revealed that two thirds of employers are confident that business activity will increase over the next 12 months.
This news follows the latest findings from the Office for National Statistics (ONS) which shows that the UK economy has grown for 11 consecutive months and is now 6.4% larger than its pre-downturn peak in 2008.