Employers lower salary budgets as employee base stabilises – WTW
The overall median pay rise for 2024 fell to 4.6%, compared 5.3% in 2023, as employers reported that a period of high resignation and turnover has passed.
Half (49%) of UK organisations reported that their salary budgets for the 2024 cycle were lower than the previous year, according to the Salary Budget Planning Report by Willis Towers Watson (WTW).
The overall median pay rise for 2024 fell to 4.6%, compared 5.3% in 2023, as employers reported that a period of high resignation and turnover has passed.
While two-fifths (39%) of employers reported having trouble attracting and retaining talent in 2024, this figure dropped from 48% over the past two years.
Overall salary budget increases were expected to rise by 4% in 2025, which despite consistently declining since 2023, remain fairly high.
Total annual payroll expenses – including salaries, bonuses, variable pay and benefit costs – continued to rise substantially, as 75% of companies reported that their total payroll expense was higher than last year.
Those organisations that lowered salary budgets cited inflationary pressures, concerns related to cost management and weaker financial results as the leading causes.
Those who raised salary budgets cited inflationary pressures and a tight labour market.
Inflation has dropped significantly in 2024 to 2.3% and is expected to remain at a similar level in 2025.
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