With inflation hitting 5.4% in December, the highest rate in 30 years, the cost of living crisis will undoubtedly put pressure on pay. Even though the national living wage is set to rise by 6.6% to £9.50 an hour in April this won’t be enough to absorb the cost of living rise in inflation, and the increase in National insurance. Employers will be faced with decisions on pay, especially when recruitment and retention of key staff is critical. Over 2021 the average pay rise in the private sector sat at 2% but it is predicted that this will rise in 2022. The CIPDs labour market outlook found that pay intentions had risen to 2.5% by Autumn 2021 with thoughts that the median pay rise would be even higher. Employers need to think carefully about what is affordable, what is fair, and address pay disparities within the workplace. However creative thinking on reward is also needed. Rewards Director at Willis Towers Watkins highlights that “A lot of companies are looking at reward in the context of a broader employee experience because they don’t have an endless amount of money to throw at the issue.” Employers are looking at what else they can offer in terms of skills development, work place culture, job design and workplace balance. Reward can be much more than salary.
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