I read with interest an article by David Smith in the Sunday Times, 12th November, whereby he outlined a couple of recent surveys that indicated pay rises look imminent next year. The Bank of England’s Regional Agents survey showed many firms are finding it harder to recruit in the past 3 months ‘relative to normal’ with the difficulty score sitting at just over +2. A further survey conducted by REC (the Recruitment & Employers Confederation) suggested that shortages of available candidates were beginning to affect pay and starting salaries were being driven up as a consequence. Of all the regions, rather predictably the steepest increase in pay inflation was seen in the South of England.
The Phillips curve shows the inverse relationship between wages and unemployment and as unemployment is at its lowest since 1975, it should be no surprise that wages are on the increase. Employment figures over the past 12 months have increased, but that has been dominated by both part-time and self-employed workers indicating that productivity might not be on the same increasing curve as wages.
If pay is on the increase, what does that mean for the movement of talent; especially within the HR market? The protracted talks around Brexit had stalled the movement of some HR professionals who didn’t want to risk being ‘first in and last out’. However, in some pockets of HR, roles are actively being headhunted and talent aggressively sought. We have seen a significant rise in the number of Reward and Performance professionals required – the specialists who typically manage the pay, grading, remuneration and benefits for all employees in a business. Are they being sought to keep wage inflation down or are they charged with retaining and attracting the best talent possible in an increasingly difficult market?
Equally, those HR professionals who can combine change management, organisational design and business transformation with the risk management skills of ER are in high demand and the wages offered in these positions are starting to reflect this. Where the salaries were below par, businesses are realising they can’t attract the highest calibre talent.
Whatever happens over the next 12 months or so, the budget announcement on 22nd November is likely to have some impact. Growth in Britain as forecast by the European Commission is gloomy and pressure for the government to double infrastructure spending is building from within its own party. Pay rises might be coming, but we can question whether significant increases in productivity will follow?