Economic recovery not reflected in employee salaries » SMEInsider

Economic recovery not reflected in employee salaries

According to the Chartered Institute of Personnel and Development (CIPD), the number of organisations who said they were employee pay fell by 7 per cent, despite the UK economy growing by nearly 3 per cent in 2014.

In 2014, the economy grew at its fastest pace since 2007, with the number of SMEs and micro-businesses also increasing, according to the CIPD’s annual Reward Management Survey,

However,the number of business owners who said their pay packets were in the top 10 per cent of their sector fell from 35 per cent recorded in 2011 to 28 per cent in 2014.

In fact, the number of companies that said they were positioning their pay in the bottom 10 per cent or lower quartile of the market has increased to 17 per cent, from a low of 13 per cent in 2012.

CIPD’s survey found that the top three sectors that were likely to position pay in the upper quartile of the market were manufacturing, production and private sector services

Four out of ten respondents in the manufacturing and production sectors, and three out of ten of those in private sector services said they position pay in the upper quartile or top 10 per cent bracket.

Organisations in the voluntary, community and not-for-profit sector on the other hand, are generally much less competitive with 84 per cent positioning pay in the median, lower quartile or bottom 10 per cent brackets and just 17 per cent in the upper quartile or top 10 per cent.

However, the survey did highlight some positives. A person’s competence and skills are now being more recognised when employers make pay decisions.

Almost two-thirds (64 per cent) of employers now use competencies as pay progression criteria, compared to 50 per cent in 2011. Likewise, the use of skills in determining pay progression has increased from 44 per cent to 60 per cent over the same time period.

“With continuing economic growth and recovery of the labour market, we might have expected organisations to be aiming for competitive salaries to attract and retain employees. However, this survey shows that so far this isn’t the case,” said Charles Cotton, Performance and Reward Adviser at the CIPD.