Projected salary increases in the UK for 2015 are estimated at 3.0 percent, which represents a slightly more conservative outlook than the 2014 summer projections which measured salary increases at 3.1 percent. Even so, the 2015 projection is still consistent with the trend of the last three years in which salary increases have been stable at around 3.0 percent. Aon Hewitt’s ‘Global Salary Increase Survey’ conducted in January this year, contains data from 560 companies representing 5,390 employers across 31 industries and 121 countries. The data for the UK covers 215 companies across all sectors and sizes.
Andrew MacLeod head of Pay Research at Aon Hewitt, said: “The UK economy has been growing for the past two years and that increased stability is feeding through into salaries. While employers are by no means letting wages off the leash, they have been able to keep salary increases more or less stable – more so than in many other economies in Western Europe. Couple this background with the recent Office for National Statistics (ONS) announcement of 0 percent inflation – the lowest on record – and it will have a significant, real terms, impact on employees’ take home pay.
Unlike the other large European economies (with the exception of Germany), the UK is continuing to offer above average salary increases. Any significant drop in salary increases in the UK is unlikely, especially when taking the recent positive development in the economic environment into consideration. By contrast, France and Italy have continued to record more significant drops in projected salary increases than recorded in the report conducted in the summer of 2014.
Compared to last year’s winter update, Aon Hewitt found the following changes on the UK job market: Companies are more cautious regarding salary increases.The number of firms considering salary freezes has increased by 6.0 percent in 2015. Companies are hiring. The number of businesses planning to increase recruitment activity has increased by 3.0 percent (in total 26.8 percent) and 2.6 percent fewer companies’ state that they plan to freeze hiring (in total 1.8 percent). Lay-offs are decreasing.
The number of companies planning to lay off staff has decreased by 4.0 percent compared to last year and 78.5 percent of firms are stating that they do not plan any redundancy activity in 2015. Andrew MacLeod added: “It's not entirely surprising, despite the positive headlines on the economy, that some UK companies are behaving more cautiously on pay budgets– there is still a great deal of ongoing uncertainty in the Eurozone and in other major global economies. However, as unemployment continues to fall and as the economy continues to pick up, we can expect to see upward pressure on pay budgets as companies start again to compete for the best talent.”