Almost a third of employers in the UK (32%) are finding themselves in the middle of a wage spiral, having to inflate salaries to maintain a competitive edge in the war for talent, according to the latest salary guide from Robert Half.

The firm’s 2024 salary guide, which analyses and reports on market salaries, hiring trends, and skills requirements across the UK, a further 26% of companies are offering additional one-off bonuses to keep hold of their staff.

With inflation still an issue for the UK, 41% of employers indicated that they will offer a flat-rate salary increase for all employees in the next 12 months, while 27% are planning pay increases in line with inflation. 

The research also found that 69% of businesses are confident in their 2024 growth prospects.

Matt Weston, Senior Managing Director UK & Ireland, at Robert Half, said, “Many employers may be shocked next year at the salaries that some of their most in demand roles will command. Without careful planning this will weigh heavily on company profitability at a time when businesses are struggling with costs.”

Weston added, “It is no surprise to see financial incentives are perceived to be a top solution. However, continuous pay rises aren’t sustainable and firms need to consider how else they can boost hiring prospects and reduce attrition. With the UK continuing to face significant skills shortages and 75% of employers concerned about the attraction and retention of staff in 2024 according to our research, firms will find themselves with little option but to listen to the employee voice.”

“Yet, pay is not the ‘be-all and end-all’. A robust corporate culture and a tailored retention programme can be a cost friendly strategy,” Weston continued. “Our research shows, for example, that almost half (47%) of the workforce would reject a new job if the company didn’t offer flexible working, yet news reports continue to highlight brands that are enforcing office returns. And in many instances employees leaving a business do so due to deep-rooted talent attrition causes such as heavy workloads and a lack of development opportunities. Business leaders must address all aspects of the employee experience and must do so fast, since an increase in pay is the inevitable by-product of ‘jumping ship’.”

Earlier this week, data from the Office for National Statistics for the June to August 2023 period showed annual growth in regular pay (excluding bonuses) was 7.8% in June to August 2023. Annual growth in employees' average total pay (including bonuses) was 8.1% in June to August 2023. Annual growth in real terms (adjusted for inflation using Consumer Prices Index including owner occupiers' housing costs (CPIH)) for total pay rose on the year by 1.3% in June to August 2023, and for regular pay rose on the year by 1.1%.