UK employers to give staff 2.9% pay rise in 2022

Pay and working hours rise as employment falls

New research has found that UK employers are planning to give their staff an average annual pay rise of 2.9% in 2022.

A total of 725 UK firms took part in a global study about salary budgets and recruitment by advisory, broking, and solutions business Willis Towers Watson (WTW), which revealed that 2022’s pay increase is set to be more than the 2.4% average this year. As inflation is forecast at 2% for next year, this is nearly a full percentage point rise in real terms.

According to the research, this finding comes as the proportion of businesses that are expecting to completely freeze staff pay looks likely to fall from more than 10% this year to 1.7% in 2022.

Average rises in 2022 are anticipated to be higher in the media, leisure and hospitality, and high tech sectors, at 3.3%, 3.2% and 3.1% respectively. Those working in the banking automotive and chemicals sectors will have smaller increases, at 2.3%, 2.4% and 2.5% respectively.

The findings also highlighted that this year, UK businesses have fought to motivate and retain staff by awarding their top-performing employees a pay rise that was 2.6 times greater than that given to those with average performance ratings.

In addition, more than half (54%) of UK organisations said their business outlook is ahead or well ahead of where they thought it would be at this time, while 3% stated it was below expectations.

Paul Richards, data services leader for the Europe, Middle East and Africa region at WTW, explained that as the Covid-19 (Coronavirus) threat starts to recede and the economy begins to recover, there will be year-on-year improvements in pay rises.

“Employees in some industries are faring better than others, but these are often the industries that were hardest hit by the pandemic, such as leisure and hospitality. Overall the outlook for salaries is strong as businesses start planning budgets for 2022, and many are keen to retain top-performing staff, with performance-related pay as key areas of the employment market start to hot up,” he said.