Inflationary pay increases

DartfordKit

Hi all, this could be a post for numerous places but figured this might be most appropriate. I've seen a few posts around inflation generally on the forum but nothing specific to this question, apologies if I've missed any!

I was wondering what different individuals expectations are in relation to inflationary pay increases in their next pay review given the current high inflation environment. A lot of public sector information is available in the media but we do not see much around the private sector which is more immediately of interest to me. Obviously, some might answer with 'what do you think the job you do is worth?' or 'what are other employers offering for the same job?' but what I'm trying to get is what would a reasonable 'cost of living' increase be for people looking for continuation. 

From a personal perspective, I've not felt too much expense pressure yet though that might soon bite with energy, food, travel, etc. Much, of course, will depend on the sector, size of business and starting point of salary. My company has April pay reviews and has budgeted (in Aug/Sept) for a 2.5% increment across the staff for a firm of c. 50 which is peripheral to financial services - that seems quite reasonable to me even though CPI is at 5.5%.

Thanks for reading, just pondering really!

Sandtree

Define "reasonable cost of living increase"?

If you want to remain absolutely neutral in your buying power etc then you need CPI pay rise (or similar such index) irrespective of what you earn. 

If you accept that these are hard times and people will need to cut back then the percentage will need to vary between those at the lower end of the scale where basic living costs are a much higher percentage of wages -v- those at the upper end where its smaller.

The reality comes down to the business and its industry too, just because general costs are going up doesn't mean that your employer's revenues have increased... they may have stagnated or fallen but certainly their costs will have risen (eg utilities) and so they have a squeeze on profits even before considering raising anyone's salary.

Doshwaster

We had 1.7% announced this week but not paid until June.

mr_stripey

I was given a 2.5% rise from 1 April. Better than nothing I guess!

Grumpy_chap

I suspect many pay reviews in the Jan 22 or Apr 22 annual uplifts will fall far below the current inflation indices which have spiked late in the process.

[Deleted User]

 "Wage growth at 3.6% but not keeping pace with inflation

Average weekly earnings for regular pay (excluding bonuses) in December 2021 increased slightly to 3.6%.

This growth figure is likely to be more accurate than the summer figures as they are year on year comparisons with a time when wages were returning to pre-pandemic levels. However, it shows wages are actually being squeezed when accounting for inflation.

Headline growth is stronger in the private sector 3.9% (down from 4.1%) than in the public sector which lags at 2.7%.

Manufacturing gas dropped to 1.3% from 1.9% on the month but Finance and Business Services keeps overall growth high at 7.0%.

Early estimates for January 2022 indicate that median monthly pay for the UK was £2,050, an increase of 6.3% compared with the same period of the previous year. However, 10% of payrolled employees earned equal to or less than £672 per month."

DartfordKit

Sandtree said:

Define "reasonable cost of living increase"?

If you want to remain absolutely neutral in your buying power etc then you need CPI pay rise (or similar such index) irrespective of what you earn. 

If you accept that these are hard times and people will need to cut back then the percentage will need to vary between those at the lower end of the scale where basic living costs are a much higher percentage of wages -v- those at the upper end where its smaller.

The reality comes down to the business and its industry too, just because general costs are going up doesn't mean that your employer's revenues have increased... they may have stagnated or fallen but certainly their costs will have risen (eg utilities) and so they have a squeeze on profits even before considering raising anyone's salary.

Indeed, what is reasonable would depend on individuals and the business circumstances. Appreciate you highlighting these important considerations!

DartfordKit

arctic_ghost said:

 "Wage growth at 3.6% but not keeping pace with inflation

Average weekly earnings for regular pay (excluding bonuses) in December 2021 increased slightly to 3.6%.

This growth figure is likely to be more accurate than the summer figures as they are year on year comparisons with a time when wages were returning to pre-pandemic levels. However, it shows wages are actually being squeezed when accounting for inflation.

Headline growth is stronger in the private sector 3.9% (down from 4.1%) than in the public sector which lags at 2.7%.

Manufacturing gas dropped to 1.3% from 1.9% on the month but Finance and Business Services keeps overall growth high at 7.0%.

Early estimates for January 2022 indicate that median monthly pay for the UK was £2,050, an increase of 6.3% compared with the same period of the previous year. However, 10% of payrolled employees earned equal to or less than £672 per month."

Thanks for highlighting this, some interesting data points

TBagpuss

I think it depends a lot on the business - a lot of businesses will be seeing other overheads go up and pay rises are something they have a bit more control over (subject to being able to retain staff, of course!) 

Where I work, pay reviews typically happen in May or June, once the business has their year end figures available, and would take into account COL and performance  at the same time.  

Intoodeep

We received 5% in January

billy2shots

As an employer I have just given 8% to 14 staff members.

This was in part because they earned it but also the cost of taking on new staff at higher rates so only fair existing staff benefit. 

All sunshine and roses then. More money for staff, more tax to the government. 
Not quite. Due to spiralling costs I had to close one site and now employ less than half the people I did.

Net result, less tax for the government. 

But people don't  often see that side of the story. 

Where does this 8% come from? My pocket, untill one day I can't afford that and the business will be sold/closed. 

An employer's priority is to remain solvent. Employees are free to come and go and few have little interest in what the business can or can not afford.