Pay increases in the retail sector are failing to recover from recession levels, according to Hay Group.
Its Retail Sector Report also found an increasing use of performance-related pay in the sector, although retailers are making bonuses more difficult to earn.
The report revealed retailers predict salary increases of 1.9% over the next 12 months, the same figure as last year, while pay in the general market is expected to rise to 2.4%.
This gap of 0.5% is the largest in recent years, despite most retailers performing well against targets and high inflation levels.
The report found that although there is a rising trend in the use of performance-related incentives, retail staff are having to work harder to achieve maximum bonus payouts, with 71% of employers requiring staff performance to ‘far exceed expectations’, an increase from 59% in 2009.
Steve Paola, reward information consultant at Hay Group, said: “Despite tentative signs of economic recovery and good performance by many major retailers, employers in the sector remain cautious about the economic outlook and continue to award modest pay increases.
“Retailers are also taking a lead from other sectors in how they manage reward, using their pay budgets in a smarter way by targeting key areas and focussing on talent.
“We are seeing a move away from one-size-fits-all pay increases towards a more performance-based culture.
“As is the general trend, bonuses are becoming more difficult to achieve as companies raise performance thresholds in the face of greater scrutiny from senior management.
“However, retailers are seeing the strategic benefits of a performance-based culture, and will still reward the right behaviours and results when paying out bonuses.”
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