New research finds that “cautious optimism” may be creeping in over the next year as salaries for private sector workers are expected to rise.
Willis Tower Watson, an advisory, broking and solutions company, have released new research within their Salary Budget Planning report which finds salaries may rise next year.
Due to the effects of the COVID-19 pandemic in March of this year, companies were forced to revise their expected pay rises which did not see a great increase. The average figures for salary increases this year stood at 2.2 per cent.
However, perhaps due to news of the imminent vaccine, UK private sectors are expected to see average pay rises of 2.4 per cent in 2021.
According to this report, this “cautious optimism” displayed by employers is also expected to extend to pay freezes.
In 2020, the number of private sector companies which chose to freeze pay increases stood at a third (33 per cent). However, in 2021, this number is expected to significantly fall to just over 3 per cent of companies.
However, the situation does differ depending on the sector. Predictably, the Leisure and Hospitality sector, which was hit hard by the pandemic, is only expected to see a 1.4 per cent increase in salaries over 2021.
Similarly, workers within the Construction, Property and Engineering sectors are predicted to see a 1.8 per cent pay rise whilst employees that are part of the Automative industry are expected to see a 1.9 per cent increase.
Conversely, other industries will see a larger increase in their pay. Fintech is forecasted to have a pay increase of 2.8, insurance, on average, is set to see a salary increase of 2.9 per cent. Surprisingly, this is also matched by the Retail sector (2.8 per cent) which may be attributed to online sales booming during lockdown.
Keith Coull, Senior Director at Willis Tower Watson’s Global Data Services business, said:
After a difficult year for employers and employees – battling lockdowns, employee safety issues, working from home and declining revenues – many employers are finding ways to handle the crisis better, manage their businesses and help their employees with a more focused work and reward strategy.
Many companies are looking ahead to 2021 with cautious optimism, which is reflected in slightly higher pay rise budgets than we saw this year.
Not all industries have been impacted in the same way. While many technology and banking firms have been successful due to their ability to aid digital acceleration and financial liquidity, companies in the hospitality, leisure and airline industries have suffered. The differences in how companies were impacted by the pandemic are likely to be heavily reflected in pay rise levels too.
We are also expecting many companies to be differentiating their allocation of pay rises, so that they can provide meaningful salary increases to their best and most valuable talent and prioritise spending on jobs that are likely to contribute the most to success or survival next year.
*The Salary Budget Planning Report is compiled by Willis Towers Watson’s Data Services Practice. The survey was conducted online in October/November 2020, receiving over 18,000 sets of responses covering over 130 countries worldwide.