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A new survey from the Chartered Management Institute shows nearly half of employers have no known plans for pay rises this year.
Nearly half of employers are offering no salary rise or people who work there are unaware of any plans to do so, according to research by the Chartered Management Institute [CMI].
The survey of 1,000 UK employees also showed that a third of private sector managers is concerned about the financial strength of their organisation. Half of the employers are offering basic pay awards, said to represent on average a 2.8% rise, while inflation is currently at 7%. Of those increases, pay awards in the private sector are higher than public sector, at 3.2% compared to 2.4% for the public sector.
The research also showed that a third of managers have seen an increase in requests from their direct reports for pay raises, above basic pay awards. A third of managers themselves are thinking about requesting a pay rise, above basic pay awards, to meet the rising costs of living.
Only one in five employers are planning action to support staff as a direct result of the cost of living crisis (with, for example, cycle to work schemes, eye care vouchers, employee assistance programmes and free tea, coffee and cold drinks). 57% of all managers say their organisation hasn’t taken any actions or didn’t know if there were plans to cope with rising business costs. Where respondents did know, measures such as contract negotiations, budget reductions and streamlining expenditure were cited.
Anthony Painter, Director of Policy at CMI, said: “Cost pressures are hitting employers and employees alike, and something in the system will have to give. There is a great cost squeeze with employees under financial pressure. Businesses also face the squeeze as they face a potential downtick in wider consumer confidence, and higher prices for materials, supply chain issues and higher production costs. Add to this that we’ve not really seen the full effects of the Ukraine conflict filter through yet, and it’s clear that pressure is mounting across the board and there are undoubtedly some rocky times ahead.”
CMI is advising businesses and organisations to provide support for staff facing rising costs, including financial capacity training, be more agile, invest in upskilling and future proof their businesses against ongoing economic shocks through, for instance, reviewing their supply chain.
Painter said the Government’s Spring Statement did not provide enough support to businesses and added that pressures are likely to mount. “Government will need to act by autumn at the latest,” he said.