Pay rise expectations in UK skyrocket, but pay still isn’t meeting inflation

16 May, 2023

The new People at Work 2023 report from ADP® Research Institute shows almost three quarters of UK workers (74%) expect a salary increase this year – with an average 5.6% uplift in mind
This comes as over half of UK workers (54%) say they they’re underpaid for their current job and responsibilities
Report also shows that 66% received a pay rise last year – with rises averaging 4.9% of salary

London – 16th May: New data released today shows the reality of pay expectations in the UK compared to inflation and rising cost of living. ADP® Research Institute’s People at Work 2023: A Global Workforce View has revealed UK workers’ expectations around pay rises for the coming year have skyrocketed, with almost three quarters expecting a salary increase in the next 12 months, up from 50% the previous year.

On average, workers expect an uplift of 5.6%, which is considerably lower than the global average of 8.3%. However, just over 1 in 10 workers (12%) are expecting to get pay rises of 10% or more, meaning the vast majority of workers are not expecting pay rises in line with current levels of inflation.

Across the industries, those in the finance, construction and IT / telecommunications sectors have the highest pay rise expectation in their sights next year (at 6.1% on average), while leisure and hospitality staff anticipate the lowest (5.1% on average).

The findings come amid the ongoing cost of living crisis and as workers in the UK demonstrate a willingness to take industrial action to force their employers to be more generous on pay and conditions. Over half of workers in the UK (54%) believe they’re underpaid for their job.

Demands for higher pay come after two thirds of UK workers (66%) were given a pay rise last year. Those pay rises averaged 4.9%. Given that the International Monetary Fund’s (IMF) global inflation forecast for 2022 was 8.8%,^[1] this equates to real terms pay cut.

Sirsha Haldar, General Manager, ADP UK, Ireland & South Africa, comments: “The rising of expectations on pay is showing no sign of slowing down this year. For workers in the UK, there’s a lot riding on getting a pay rise with the current rate of inflation and rising cost of living. Even for those who were given a pay rise last year, it’s unlikely to silence demands for more.”

“As the cost of living has soared, workers across lower and middle-income bands have found that their disposable incomes have been severely hit, and even some higher earners are feeling the pinch. Spending on essentials, let alone luxuries, is being tightly squeezed as they grapple with soaring energy bills, rising rents, increasing interest rates and escalating food bills. Even if inflation has peaked, it looks like it will take some time to return to more comfortable levels and workers feel prices reflect their pay.”

“Employers have a difficult task weighing up the clamour for higher pay against their own challenges around rising costs and tightening profit margins. Workers are confident that they will get a pay rise from their current company – but if not, there’s a strong sense that they’ll be able to secure one by moving jobs. The implications for talent acquisition and retention are huge.”

“As the recent strikes in the UK across multiple industries has shown, many workers feel enough is enough. They are willing to take increasingly drastic steps by staging walkouts to ensure they get their point across and campaign for better pay.”

“Employers who aren’t in a financial position to offer decent pay rises may have to think creatively about how to appease staff in other ways such as via offering greater flexibility of hours and location, more paid leave or other benefits.”

People at Work 2023: A Global Workforce View is an annual report surveys over 32,000 workers in 17 countries and explores employees’ attitudes towards the current world of work and what they expect and hope for from the workplace of the future.

ENDS

About the research

People at Work 2023: A Global Workforce View explores employees’ attitudes towards the current world of work and what they expect and hope for from the workplace of the future.

ADP Research Institute® surveyed 32,612 workers in 17 countries around the world between 28 October and 18 November 2022 including over 8,613 working exclusively in the gig economy. This included:

7,721 in Asia Pacific (Australia, China, India and Singapore)
15,290 in Europe (France, Germany, Italy, the Netherlands, Poland, Spain, Switzerland and the UK)
5,751 in Latin America (Argentina, Brazil and Chile)
3,850 in North America (USA and Canada)

Within the worker sample gig workers and traditional workers were identified. Gig workers were identified as those who work on a contingent, temporary, or seasonal basis, or as a freelancer, independent contractor, consultant, gig worker, or use an online platform to source work. Traditional employees were identified as those who are not working in the gig economy and instead have a permanent full or part-time position.

The survey was conducted online in the local language. Overall results are weighted to represent the size of the working population for each country. Weightings are based on labour force data from the World Bank,^[2] which is derived using data from the ILOSTAT database, the central statistics database of the International Labour Organization (ILO), as of February 8, 2022.

About ADP (NASDAQ – ADP)

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[1] Source: International Monetary Fund, World Economic Outlook Report, October 2022
[2] Source: The World Bank, Labor force, total, World Development Indicators database, February 8 2022