Ryan FowlerNearly half of business leaders have experienced higher employee turnover after delaying pay rises for professional and white-collar staff, according to new research from talent solutions firm Robert Walters.
The study found that 36% of employers reported disengagement within their teams as a result of postponing or reducing salary reviews. While the approach may help manage costs in the short term, the findings suggest it is having an impact on morale and retention.
Chris Eldridge, CEO of Robert Walters UK&I, said: “Businesses are under immense pressure to keep costs down, and for many, salary increases just haven’t been feasible this year. In fact, 64% of business leaders said budget constraints and business performance were the top reasons for delaying or reducing pay rises. Our research shows that these decisions, while understandable, are not without consequence. Whether it’s higher turnover or a gradual drop in motivation, companies are starting to feel the effects.”
The report also highlights a clear disconnect between employer actions and employee expectations. Of those who did not receive a pay rise this year, 67% said they are actively job hunting. Even among employees who received an increase, 61% said it was lower than expected.
“There’s a clear message here: even if employees understand the business pressures, unmet expectations are still pushing them to reconsider their options. And with AI tools streamlining the job application process, employees have more opportunities than ever to explore new roles,” added Eldridge.
Sinead Hourigan, global head of talent advisory, CX & commercial at Robert Walters, said: “This is where salary benchmarking and market insights become so important. Workers who haven’t seen a pay rise may be planning to discuss salary in their mid-year reviews, and employers will need market data to communicate credibly, demonstrate fairness, and manage expectations.”
Robert Walters also advises employers to look beyond pay when addressing retention challenges. Hourigan said: “We’re seeing more employers ask how they can retain their best people when pay increases aren’t on the table. When salaries are constrained, culture and communication matter more than ever. The organisations that succeed will be those that balance cost control with a thoughtful, market-informed approach to employee engagement.”
