Many SMEs were unable to give staff pay rises in 2023/24

While there were reports of ‘soaring’ pay inflation over the past 12 months, it’s become apparent that not everyone benefitted from this.

In particular, small employers and those in the private sector were the least likely to gain during this time, with many businesses admitting to being too hard pressed to give staff a pay rise in 2023/24.

The findings, compiled by the Recruitment and Employment Confederation (REC) and commissioned by Savanta, found that half of the surveyed employers did not give pay rises in 2023/24 – this breaks down as 41% public sector and 53% private sector.

Small employers (0-49 staff) were the least likely to give pay rises.

Commenting on the findings, Shazia Ejaz, REC Director of Campaigns and Research, said, “Over the past year, we’ve seen a divide between pay winners and losers, as many businesses are squeezed by inflation and stagnant economic growth.

“Until we ignite economic growth, the number of winners on pay will remain limited. Clearly, not everyone is feeling the benefits of pay hikes, especially within the private sector and smaller companies.

“Our survey highlights the economic volatility of the past 12 months, showing how certain industries are grappling with a slowdown in demand while labour shortages intensify competition for roles in specific sectors.

“Employers have had to get creative with non-salary perks to keep talent, but there’s a limit to how much they can stretch. For businesses to invest in their people, they need renewed confidence – something that could come from further interest rate cuts and Autumn Budget reforms that unleash greater investment in their workforce.”

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