The cost of living has long been a metric for setting pay rises but in the current period of high inflation and turbulent job markets it can be hard for employers, staff and job seekers to know where to set their expectations. In this article we’ll look at the issue of salary negotiations, from the client’s perspective, the employee’s and the candidate’s.
The first quarter of the year is typically a time for what is widely known as the annual “cost of living” pay increase. This year, inflation is running unusually high and there is the real risk of a mismatch between employee expectations and employer intentions.
Office for National Statistics (ONS) data for 2022 shows that pay growth in the public sector was 2.2% in July to September and 6.6% in the private sector. This is the largest private sector pay growth and the largest gap between public and private pay growth on record.
However, a recently published employment survey revealed that over a quarter (26%) of UK workers are unhappy with their current salary, with 7% very unhappy. Of those who said they were unhappy, 61% said it was because their salary hadn’t risen in line with the cost of living.
The ONS suggests high vacancy rates in certain industries are helping to push up salaries and this is certainly the case in HVAC. There is a real shortage of experienced engineers and salespeople to support the current rapid growth in cooling, decarbonised heat, renewables and HVAC in general.
Employees and job seekers should not expect a limitless pot of money for salary increases but in sectors such as HVAC, they may well have more bargaining power than they might in other industries.
Employers in engineering and manufacturing face some big challenges at the moment. Firstly, they are having to find ways to upskill their current workforce to meet the rapidly shifting nature of their markets. They are conscious that candidates (and their current workforce) expect to be well remunerated for joining (or staying). On top of this they are facing higher energy and materials prices.
When it comes to pay rises and salary negotiations with potential new hires, employers should bear in mind that it isn’t always about the money. Employees have wider expectations in terms of working conditions and benefits than ever before. This gives companies the opportunity to offset salary increases with other benefits such as remote and hybrid working, job sharing, profit sharing, enhanced pension schemes, a 4-day week and extra holiday.
Drawing on our experience as recruiters in HVAC, some of the most influential benefits, when it comes to sealing a deal, include hybrid working (particularly for HVAC sales roles), a well-structured bonus scheme and a generous benefits package which includes pension, car and healthcare. You might be interested in reading our article on sales bonus packages which looks at this topic in more detail.
You may also be interested in our article What makes a really good HVAC employer?