Demands for higher pay puts pressure on corporate budgets

With the Cost-of-Living crisis and rising inflation, business leaders are being warmed by increasing numbers of the UK workforce seeking job security and better pay – making attracting and retaining the best talent challenging.

Recruitment specialists, Robert Half’s  Jobs Confidence Index (JCI)  – an economic confidence tracker produced in association with the Centre for Economics and Business Research (Cebr) every quarter found that, despite a small dip towards the end of last year, the JCI remains in positive territory at 19.9.

The Index also revealed that workers remain confident about their job security, with the search and progression pillar up 1.6 points quarter on quarter. These statistics are indicative of the skills shortages driving up both competition for talent and worker confidence.

• 7% feel confident about their career and progression prospects in the next five years (in line with the firm’s Candidate Sentiment Survey published earlier in the year, revealing that job seeker confidence is at an all-time high).
• 47% say they were looking for a new job – up eight percentage points on last years’ figures.
• 43% of those actively searching for a new role wanted a better salary.

According to Robert Half, employers need to strike the right balance between offering competitive remuneration, progression plans and providing other benefits such as learning and development opportunities – if a sustainable talent attraction solution is to be developed.

Matt Weston, Senior Managing Director UK & Ireland, at Robert Half said: “The high job confidence we’re seeing in the employment market at a time when the economy is sluggish is putting pressure on corporate budgets as higher salaries are increasingly sought. The challenge for employers will be finding the right balance of financial and non-financial incentives to ensure unrealistic pay rises don’t have a detrimental impact on the bottom line. Leaders need to be mindful  that, while they can appease staff and new recruits with modest pay rises, with skills in short supply, competitors could easily poach their most valuable resource. While above-inflation pay rises aren’t sustainable for many firms, another talent exodus could soon be on the cards if retention plans aren’t implemented.”