Approximately 40% of employers have undertaken counteroffers to retain their workforce enticed by competitive wages from rival companies in the preceding 12 months, according to recent findings from a survey conducted by the Chartered Institute of Personnel and Development (CIPD).
The CIPD’s research, encompassing insights from 2,000 employers, revealed that a significant proportion of those who had extended counteroffers in the past were anticipating the need to resort to this strategy once more to ensure staff retention.
Despite persistent concerns surrounding elevated salary offers potentially fueling a prolonged period of inflation, the UK labor market continues to display robust vacancy figures, surpassing the one million mark.
The CIPD analysis highlighted that out of the UK employers who had responded with counteroffers within the past year, 38% matched the salary proposals put forth by the prospective new employers, while an even higher proportion of 40% presented enhanced wage packages to dissuade employee departure.
Concurrently, businesses across various sectors are preparing to institute a median pay hike of 5% within the ensuing 12 months.
The CIPD routinely conducts a comprehensive examination of the UK labor market via its quarterly survey of firms. In an unprecedented move, the organization incorporated inquiries regarding counteroffers in its most recent report. However, the absence of historical data for comparison purposes precludes a clear depiction of whether this counteroffer trend has surged or diminished over time. Despite this, experts anticipate an uptick in counteroffer utilization as companies endeavor to both attract fresh talent and retain existing personnel.
While the Office for National Statistics (ONS) reported a decline in UK vacancies to 1,034,000 during the interval spanning April to June, this figure remains significantly elevated – by 232,000 openings – when contrasted with the pre-pandemic era spanning January to March 2020.
The challenge of matching wage hikes with inflation persists, as evidenced by recent figures from the ONS, illustrating an average pay increase of 7.3%. However, when accounting for inflation, this apparent raise dwindled to a decrease of 0.8%. Upcoming employment data, including the latest pay and vacancy metrics, is scheduled for release on Tuesday by the ONS.
Inflationary pressures displayed a slight easing in June, settling at 7.9%. Expectations for the forthcoming release of July’s figures, slated for Wednesday, forecast another incremental decrease.
