The 2023 Salary Squeeze

Total Jobs have recently produced a report ‘The Salary Squeeze’ on the cost-of-living crisis.

It makes interesting reading for employers and employees alike, highlighting the key issues and concerns.

Here are just some of the stats that illustrate the issues companies are facing in 2023.

30% of UK workers feel their salary doesn’t cover their basic living costs as UK employees received an average pay rise of 3.05% in the last year.  Worryingly, the average UK worker is £1,756 in debt since taking out loans to fund their basic living expenses for the first time.

Looking at expectations of pay increases in 2023, very few workers are expecting pay to rise by more than 5%. Workers on higher incomes are somewhat more optimistic than lower paid workers, so inequality may be set to rise.

Meanwhile, a third of employers say that they have put up pay by more than 5%, considerably higher than the figure for employees. It’s unclear what explains this perception gap, but this points to a misalignment regarding communication and feedback between employers and staff.

59% of UK workers report that a pay rise at least in line with inflation is one of the most important factors in their job. Following on from this, it’s flexible working hours (49%) and generous annual leave (38%). Hybrid working comes in next on the list, with just shy of a third (31%) of workers highlighting this as one of their top factors for job satisfaction. Clear progression opportunities are also essential for 27% of people.

The idea of feeling valued as an employee is important, with 22% of people who switched jobs in the last year doing so because their previous employer didn’t make them feel valued enough.

People are also continuing to look for a sense of fulfilment in their work, aiming to do something that feels meaningful to them in the hours they dedicate to their careers, with 15% of people who have recently changed jobs saying that they did so because their company’s purpose didn’t align with what they wanted out of their role.

Almost two fifths (37%) of people feel compelled to look into changing jobs within the next year in order to find work that better covers their living expenses. Almost half (48%) would find a job in a different sector if it meant they’d get paid more.

Retention is the second biggest concern for employers when thinking about the impact of high inflation on their business (38%). This is linked to how confident they feel in being able to provide competitive salaries (28% worry they will not be able to), while the same amount (28%) think the rising cost of living will inhibit their ability to offer pay rises.

The vast majority (96%) of employers want changes to be made at policy level, in order to combat the rising cost of living. The focus for many employers is to help their staff alleviate costs, with 50% of employers looking for the government to reduce energy bills and 50% hoping to see further measures to reduce the cost of living for workers in the UK.

In conclusion:

Living costs will continue to rise in the months ahead, which could drive more people to search for work in industries that can offer higher salaries. For employers, this means striking the balance between attraction and recruitment strategies while investing in existing staff, not only through yearly salary reviews but through training and equitable compensation packages that go beyond take-home pay.