Small Businesses Expect to Increase Pay by 3% Next Year

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Small Businesses Expect to Increase Pay by 3% Next Year

Recent staff shortages in shops and restaurants, due to the effects of Brexit and Covid, are set to push wages up by an average of 2.9 per cent in 2022.  

Small business owners are set to pay staff on average 3 per cent more next year, as employers face staff shortages.

Hospitality businesses have been particularly affected by the lack of staff, due to Brexit and the outbreak of coronavirus.

According to a survey by broking and solutions company Willis Towers Watson, employers will increase pay by an average of 2.9 per cent in 2022. This would be the first time wages have risen to such a level since 2019, when pay was at last beginning to rise after a decade.

Paul Richards, a data analyst at WTW, has commented that firms are competing for the best staff.

“As the Covid-19 threat starts to recede and the economy starts to recover, we’re seeing significant year-on-year improvements in pay rises,” Richards said. “Employees in some industries are faring better than others, but these are often the industries that were hardest hit by the pandemic, such as leisure and hospitality.”

“Overall, the outlook for salaries is strong as businesses start planning budgets for 2022, and many are keen to retain top-performing staff with performance-related pay as key areas of the employment market start to hot up.”

Almost half of the 725 firms, which participated in the survey, are looking to hire more staff in IT (47 per cent) and sales (46 per cent), closely followed by engineering professionals (45 per cent).

One-third of businesses are planning to recruit more staff in the next year, while 7 per cent are actually planning to reduce their headcount.

Salaries in the media industry are set to rise the fastest, at a huge 3.3 per cent. This is followed by leisure and hospitality at 3.2 per cent and technology at 3 per cent.

This is far above the rate of consumer price inflation, which was 2 per cent in 12 months to July. This shows that workers will get a real increase in their earnings.

There are some fears that inflation will reach 4 per cent later this year. If this happens, then small business owners may need to pay even higher wages. The UK hasn’t seen a wage-price spiral like this since the Seventies.

The survey has also revealed a feeling of optimism and recovery among employers. Over half of British companies feel they are “ahead” of where they thought they would be, with only 3 per cent reporting that they are performing below expectations.

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