New research conducted by specialist recruitment firm Robert Half has revealed a significant proportion of London businesses intend to offer various forms of salary increases to their employees over the next year.
The 2024 Salary Guide produced by Robert Half indicates that nearly half – around 42 percent – of businesses in London plan to provide a flat-rate salary increase to their employees in the coming 12 months. Additionally, 28 percent of these companies aim to align salary hikes with inflation rates during the same period.
However, the report also unveils a growing challenge for employers, with 19 percent indicating a constraint in offering additional pay raises beyond the current levels. Another 17 percent of these firms voice concerns that adhering to inflation-based increments would pose a risk to their business operations.
Challenges in Recruitment and Hiring
Despite the prospects of salary increments, recruitment expansion plans seem optimistic. Around 41 percent of the surveyed businesses in London aim to grow their headcount in the forthcoming year. However, a substantial 34 percent noted recruitment challenges due to their inability to offer competitive salaries when compared to other industry players. Moreover, other factors such as concerns over maintaining a healthy work-life balance impact around 28% of businesses, potentially affecting their recruitment efforts.
Philip Boden, Market Director of Technology & Financial Services at Robert Half, stressed the prevalent skills shortages in London and the growing reliance on financial incentives for talent attraction and retention. He highlighted the need for a strategic rethinking, emphasising the sustainability of pay inflation and advocating for alternative approaches such as providing career development opportunities and sustaining flexible work arrangements.
“While financial incentives can attract talent, focusing solely on pay raises is not a sustainable solution. Employers need to widen their approach, offering career development opportunities and maintaining flexible working arrangements to retain talent and meet their expansion goals,” Boden remarked.
The insights from this report highlight the evolving challenges faced by London-based firms concerning salary adjustments, recruitment, and talent retention strategies, urging a more holistic approach towards employee attraction and retention beyond monetary incentives.