The investment market gag … the risk of salaries not matching inflation
As the festive period dawns and winter draws near, everyone will be considering how to balance increased energy costs with rising inflation. As the cost-of-living sores, the push for employers to implement across the board increases in the basic salaries of employees continues to be an impeding and imminent question.
Naturally, employers continue to be hesitant to bite the bullet and absorbed additional fixed costs when the global economy and investment markets remain in turmoil.
However, from a candidate perspective, we are now witnessing uncharted industry sentiment and change. Candidate expectations from their employers are changing and candidate interest in some of Scotland’s largest and most premium employers is waning.
Why? This is partly down to a limited and tight candidate pool where candidates can command higher than average salary expectations, however there is one key correlation.
Personal earning levels are dropping. As cost-of-living increases, disposable income drops, the spiralling cost of living results in more employees being open to considering external market moves.
It’s not rocket science. People are feeling the pinch, at all levels, and if there is more earning potential in an alternative employer, and lack of recognition or support from their current employer, heads start to turn, and employee loyalty dries up.
People are feeling the pinch, at all levels, and if there is more earning potential in an alternative employer, and a lack of recognition or support from their current employer, heads start to turn, and employee loyalty dries up.Betsy Williamson CEO, Core-Asset Conulting
This is impacting some of Scotland’s largest and top-end companies worst of all. Historically these businesses have been ring-fenced, the high earning potential in this premium business would isolate employees from sector changes or turbulence. Short-term market trends didn’t tend to impact employee decision-making. Storms in teacups didn’t tend to influence the stability of the dinner-table overall.
However, the tide is turning.
For some of these businesses the worst may yet to come, they could be about to hit a “perfect storm”. The swing in general investment market sentiment from growth to value, flagging investment performance, increased overhead costs, employee uncertainty, and client disenfranchisement. Feels like a losing game of snakes and ladders.
Worrying times to be sitting at the board-table of Scotland’s top 50 employers.
Frankly, the direction of travel with both large and small employers is clear.
As the new financial year dawns in April 2023 employers need to carefully consider their employee engagement and earning strategies or run the risk of handing their top talent to their competitors. There is a lag and this gap needs addressing.
The risk of not evaluating now means key employers will fall foul of losing front-line staff to competitors who have already identified that the industry competitiveness overall is based on the quality of its people and the level of engagement and support provided when times are challenging, not just when the sun-shines!