A great start to the year
Not! Have we just gone through the perfect storm, or will it continue for some time?
As if we weren’t concerned enough about today and the future, we have just had to get through a very turbulent January including the infamous ‘Blue Monday’.
Last year was definitely an employee led market, but with the cost-of-living crisis it may be swinging back the other way, for some firms, if employees opt to stay for security rather than move on.
However, employee expectations in terms of salaries, benefits, working practices and future development are very high at the moment which may result in retention issues for some employers who could be left behind in the scramble.
As we know, much of the public sector unrest is due to demands for higher and more competitive wages which are aligned with the cost of living. But it is not just about pay as your benefits packages are also key to retention. This gives employers a difficult balancing act to achieve between retention and recruitment with the cost of pay awards and benefits packages.
So, do employees leave just for a salary increase? Some will, but most will look at the overall package offered, career development available, working conditions and the aims of the company and whether or not they are aligned to their own.
Retention vs Recruitment
The latest research from the CIPD, shows that 3.2% of the UK’s working population has changed jobs since Spring 2021. This seems a bit low as historically around 5% of employees move, or leave, each year, although this probably includes retirements and deaths.
Several other surveys have highlighted that between 25% and 40% will look to move jobs this year, principally for a better salary as the cost-of-living crisis bites.
Additionally, more than 10% will seek a second job to help with their finances as food, fuel and energy costs rise.
Firms are still having recruitment issues within the manufacturing, finance, engineering and technology/IT sectors and some roles are still hard to fill, particularly across sales and marketing.
It is not all bad news though! Apparently, wages have risen at their fastest rate for 20 years according to the ONS. However, they are still not keeping up with inflation, falling in real terms by 2.6%.
Average pay in the private sector rose 7.2% and in the public sector just 3.3%. When you think of those in the private sector that have taken pay cuts of up to 25% at various times over the last 20 years, when those in the public sector have not, it is good news for the sector.
Director confidence went up in January according to the IoD, but overall, they are still pessimistic due to inflation, our EU relationship, UK government instability, falling consumer demand, energy prices and supply chain issues.
Throw in wage inflation, interest rates, investment, trade and growth output and it seems that 2023 will be as uncertain as 2022 and 2021 and 2020…as they say, the only certainty in life is change.