The Evolving World of Remuneration

The Fourth Industrial Revolution, combined with today’s now necessary virtual ways of working, are challenging employers to acquire a variety of skills, and quickly. Finally, after 18 months of uncertainty, business confidence is beginning to rise. Two in three (66%) senior leaders now feel confident about their growth over the next 12 months, but growth ambitions can only be met if businesses can access the talent they need. Here we consider the evolving world of remuneration.

Everywhere you look, the pressing issue of skills shortages and lack of suitable candidates across many sectors are highlighted. The resurgent private sector and transforming public sector is driving an unprecedented demand for talent. The Office for National Statistics Vacancies and Jobs in the UK: October 2021 report shows a record-breaking 1.3 million live vacancies across the UK – an incredible 37% higher than pre-pandemic levels. When you combine that with pre-existing pre-pandemic skills shortages in areas such as digital, data and technology through to all corporate professions, qualified social work, care work, HGV driving and construction and trades, you can see why it’s a challenging scenario for employers. 

So, while 31% of businesses are keen to hire for vacant roles and fill newly created positions, the steep increase in demand means it is currently a candidate’s market, especially for those with rare or hybrid skill sets. 

Despite the rise in remote and hybrid working over the past 18 months, location still matters when it comes to salary. Of course, reducing salaries for those already in the company is a no-no, but nearly half (47%) of employers will make an offer to new candidates based on their location, rather than that of the company. 

Having said that, nearly half (45%) of employers have added remote working to their packages in the last year, mostly out of necessity. Many employees now expect flexibility in their working arrangements as standard – and some candidates are reported to have turned down roles where this flexibility is not part of the package. 

The good news for employees is that research has shown that employers in the UK plan to give their staff an average annual pay rise of 2.9% in 2022, mainly because of the growth in the labour market following the turmoil of the global pandemic. The rise is an improvement on the 2.4% average increase paid this year and, with inflation forecast at 2% in 2022, provides workers with nearly a full percentage point rise in real terms. 

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