According to a BBC article titled Wages Fall Sharply But Unemployment Rate Drops, wage growth is lower than inflation and unemployment rates are at their lowest in 50 years. Based on figures from the Office For National Statistics (ONS), earnings dropped by 1.2% when adjusted for inflation, creating the most significant fall since 2013. However, the unemployment rate fell to 3.7%, with 1.295 million job vacancies offering workers a huge number of opportunities.
Chancellor Rishi Sunak, is quick to point out the good news, saying, “I understand that these are anxious times for people, but it's reassuring that fewer people are out of work than was previously feared.” However, Liberal Democrat Treasury spokesperson raised serious concerns, saying, “These figures confirm families are facing a cost of living nightmare, with wages failing to keep up with soaring energy bills and food prices.”
So, with the cost of living (currently at 7%) set to go even higher, what does this mean for employees and pay?
Pay negotiations
Although employers appear to have been unwilling or actively forthcoming with pay rises aligned with inflation, existing employees and job seekers are in a good position to negotiate. Companies are struggling to hire people with the skills they need, which puts candidates in the driving seat when discussing salary.
Companies are also becoming aware of higher work expectations and the willingness of employees to job-hop if these are not met. In fact, almost one million employees moved employers between January and March 2022, prompting employers into reconsidering their staff retention strategies.
If you are feeling the pinch of a higher cost of living and entering salary negotiations, a little preparation will serve you well. Build a case for a higher wage by reviewing your recent achievements, performance reviews, sales figures, newly-gained qualifications or training, mystery shopper results, or customer/client feedback. These will help you create a picture of why you are a highly valuable worker, and one that deserves reasonable pay.
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