Improved economy, greater job opportunities, so is it time to ask for a pay rise?

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Improved economy, greater job opportunities, so is it time to ask for a pay rise?

Wednesday, August 12, 2015
The economy is improving, there are more jobs around, and greater choice for workers. So is it time we asked for a pay rise? Sabah Meddings reports.

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The recession brought with it redundancies, pay freezes, and fewer vacancies for job seekers.

On top of a rise in the cost of living, a third of workers who stayed in the same job during 2010 and 2011 saw a wage cut or freeze, according to the Institute of Fiscal studies.

But interest rates are on course to rise at the start of next year, inflation is due to pick up, and the UK economy grew by 0.7pc in the three months to June.

And while announcing a new “living wage” for low earners during his July Budget, George Osborne declared Britain “deserved” a pay rise.

Paula Lee, partner at Leathes Prior.

Pay grew by 3.2pc in the three months to May compared with the same period last year, and private sector pay was up by 3.8pc.

And according to recruiters, more jobs are available.

Recruitment agency Cooper Lomaz said it had about 620 vacancies on its website, whereas 18 months ago it was closer to 350.

It placed more than 1,000 people into jobs last year, showing people are switching employers more often.

Tips for employees and employers

For employees

Paula Lee said a pay rise or fall was a change in contractual term.

Her tips were:

■Prepare how you will ask and book a meeting. Fix a time, do not doorstep.

■Ask what they think you are worth – they might tell you something you didn’t know.

■If you want them to pay you more, demonstrate you are worth more to the company.

■Hold the discussion slightly before the tax year.

■If an employer says no ask what you have to do to get paid more. Set targets.

■If they say no you have to make a decision.

For employers

Matthew Newnham said when an employer received a pay-rise request it could spark panic.

His tips were:

■React appropriately – you don’t want to make any rash decisions.

■Discuss their request – has their performance improved?

■Ideally keep the conversation confidential. “The last thing you want is for the flood gates to open,” he said.

■Look at market conditions. Are you underpaying staff?

■A good employer won’t necessarily wait for employees to make a pay request.

■It is not all about pay – you can offer benefits such as life insurance, health cover or gym membership.

■They do not have a right to a pay rise. It has to be earned.

Operations director Mark Fletcher said job switchers had taken some of the power back and were receiving more than one offer.

“Companies are counter offering more frequently,” he said. “There’s more competition and choice for candidates.”

He said during the recession employers knew they could demand real value from the salaries they were paying.

They knew there were fewer jobs around, and could be conservative about the salaries they paid.

“Pay rises came less often,” added Mr Fletcher. “Through the recession a lot of people were cutting back. People were filling two roles and getting paid one salary.

He also said during the financial crisis, fewer companies hired graduates, and scaled back training.

“There was a five-year gap where perhaps companies weren’t developing enough talent,” he said.

“Candidates are now realising in certain areas they are in short supply.”

He added the increase in jobs and opportunities had led to challenges for employers, who needed to work hard on employee engagement and rewarding people.

But while an improved economy means there are now more jobs, for the people who stayed in work and weathered the storm, there were other pressures.

In 2013, the Office of National Statistics said one in seven workers had been made redundant since the recession.

Employment lawyer Paula Lee said when the recession started to bite in 2008 it sent shock waves through businesses, with some organisations left fighting to stay alive.

Ms Lee, partner at Leathes Prior, said people were insecure about losing their houses. “A number of employers had to make drastic cuts both in terms of workforce and they stopped giving pay rises,” she said.

As redundancies hit businesses, those remaining on smaller teams stepped up to take on the work of colleagues who had left.

“Humans have got a massive capacity to work,” she said. “Because those that kept their jobs were so grateful they took on the work of two or three people.”

She said years on, the cracks were starting to show. “Coming out of it four or five years on and people are left doing tremendous amounts of work.”

For Ms Lee, it means more stress cases. “I am seeing an increase in people being accused of poor capability,” she said.

“Their team was halved which increased workloads and they are now at breaking point and may drop a few balls.”

And with the UK pulling itself out of the recession, she said now was the time to ask for a pay rise.

But Matthew Newnham, a partner in employment law at Birketts Solicitors, said a good employer would not necessarily wait for an employee to make the first move.

“Before requests are made you should be rewarding staff the correct level based on what they are doing year on year,” he said.

He said a good employer had their eye on market conditions, and would have workers on progress plans. He added: “A lot of business have specific salary review times each year. It means you are managing the process.”

Trade Union Congress general secretary Frances O’Grady said after the recession, workers had suffered the longest decline in living standards since Queen Victoria was on the throne.

He added: “But the economy has been in continuous growth for over two years now, so workers are entitled to a much fairer share of growth through better pay rises.”