Salary reviews 2022 – will they be enough?

Written by Andrea Frith

As the economy recovers from the fallout of the pandemic and the demand for talent continues to outweigh the supply most organisations will be planning to increase salaries for 2022.

What should the average salary increase for 2022 look like?

It is expected that senior executives, management, and professionals should expect to see on average a salary increase of 3% and the average for manual/blue-collar workers to be 2.8%. This is a national average and will also vary by industry. It is fair to say that the sectors that were hit hardest by the pandemic are in the main faring better than others in terms of growth and this is where there is tending to be the greatest staff shortage. Employers in the low-wage sector such as hospitality and food production are expected to increase salaries at the highest levels for a decade.

The wages within the public sector including teachers, civil servants and police officers are to rise as Rishi Sunak announced the end to the pay freeze imposed last year. As it stands inflation sits at approx. 3.1% however there are predictions that this could increase to as high as 4% by December and possibly even higher. The actual pay increase is yet to be announced, will this be enough to keep up with inflation?
The balance will come with understanding if the increase will be enough to offset the increase in the cost of living with the potential that inflation could rise higher than 4 per cent soon.

The rise of 3% is better than the 2.4% average increase paid this year, and it is anticipated the rises will be higher in media, leisure, hospitality, and the high-tech sectors. There is also some evidence that some UK businesses are having to reward their top-performing employees with between 2 and 3 times more than the average performing employee. This comes as the fight to motivate and retain talent continues. 
The increase in salary may come in different formats and could involve a willingness to pay a bonus instead of a salary increase.

In general, the outlook for salary increases is strong as businesses start planning for 2022 and will be eager to retain top-performing staff.

Employers will need to act now and ensure that salaries are competitive, this needs to be accompanied by benefits packages that are attractive.  Investment in talent has always been vital, it may mean that this needs to be stronger going into 2022.

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