If you’re an employer, you’ve likely noticed a change in how much money potential candidates and existing employees alike are expecting. There are several reasons why workers across the board are looking for a salary raise, but, from an employer’s point of view, it’s likely you’re feeling tentative about increasing salaries or offering a higher starting salary to new recruits.
Whether you’re worried about your existing team members getting offended by new team members being offered salaries that are on par or more than theirs, or if you’re concerned about the financials of accommodating the rise in salaries, the bottom line is that your hesitancy – no matter the reason – could end up costing you dearly.
This is because post-pandemic, we’ve seen the biggest shift in the job market for decades, and it’s imperative you make every effort to keep up if you want to be a diverse, competitive business. With this in mind, here are some of the reasons behind recent salary increase expectations.
Increased job postings
When the pandemic first began, many businesses closed their doors, and thousands of people lost their jobs. The economy shrunk and the job market became very stale, but it didn’t take long for things to open back up again. The problem was, many businesses didn’t have enough staff to operate, forcing a huge surge in the number of vacancies. This has continued to this day, but with the pandemic changing priorities for lots of people (more on that in a minute), there are more job vacancies than there are candidates.
In a candidate-driven market, job seekers have all the power as countless companies fight to recruit the best talent. As a consequence, many businesses are starting to offer increased starting salaries above what they would have offered pre-pandemic in a bid to secure a new recruit.
As mentioned, many people have changed their priorities following the pandemic and, for a lot of people, that means ensuring they have a suitable buffer behind them should anything in their life go drastically wrong. This means not living paycheque to paycheque, which, in turn, pushes salary expectations up.
The rise in the cost of living
The final and perhaps core reason behind the increase in the expected salary range is the increase in the cost of living. National insurance tax has increased, inflation has risen to the highest level in 30 years, the energy price cap has increased, and the cost of things like petrol and diesel are increasing by the week.
This means a lot of people will be feeling the pinch and expecting their employer to help soften the blow. Some estimates show that in order for workers to retain the same level of pay as pre-pandemic, they need to ask for an 8% pay rise as a minimum. New recruits will be looking for a higher salary off the bat, whilst your existing employees may leave if you don’t take the steps to ease the financial burden that other companies are.
With this in mind, you need to be asking yourself if you can really afford not to offer a pay increase or accommodate the rise in salary demand.
Learn more about attracting top talent
BMS Performance is on hand to provide support and advice if you have open job roles and want to learn more about attracting top talent to your company, including advice on setting reasonable salary expectations during the recruitment process. For more information, please contact us.
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