Insights
Navigating the Inflation and Wage Growth Dilemma: Expert Tips to Ensure Your Salary Keeps Pace
Victus Search, Multi-jurisdictional Recruitment Partner for Financial Services 310 310Read it in 3 minutes
Insights
Read it in 3 minutes
With UK inflation recently hitting record highs, persistently rising prices are steadily eroding the purchasing power of fixed incomes. To maintain your current standard of living, your salary needs to increase at least as much as the prevailing inflation rate each year. However, wage growth does not always keep up. This article explores pro tips from salary negotiation experts to grow your earnings in line with inflation, even when employers drag their feet.
Inflation is the rate prices increase for goods and services. When inflation exceeds your income growth, your money buys less over time. For example, with 10% inflation, you need 10% more money to buy the same items. Ensure your salary rises enough to cover the inflation rate and offset reduced purchasing power.
In the UK, the key inflation benchmark is the Consumer Prices Index including owner occupiers’ housing costs (CPIH). The Office for National Statistics calculates this monthly. For February 2023, CPIH inflation was 6.4%. Understanding this benchmark determines how much your income needs to increase to keep pace.
While inflation erodes purchasing power, wage growth offsets it. The UK’s average total pay increased 8.5% year-over-year in January 2023. Reviewing average wage growth provides context on realistic salary increase possibilities in the current environment.
Online salary inflation calculators let you input your current pay and forecast salary growth needed to offset inflation. This gives you a specific target to request. For example, with 6% inflation, £50,000 in pay would need to rise to £53,000 next year to maintain purchasing power.
When requesting a pay rise, use inflation benchmarks, wage growth statistics, and salary inflation calculator outputs to quantify the increase needed to maintain your standard of living. Data strengthens your case versus mere anecdotes.
If your current employer cannot accommodate inflation-adjusted salary growth, explore job changes offering higher pay. Some sectors or firms provide greater growth potential. Change is difficult but necessary if you’re languishing below inflation.
If attaining an inflation-matching salary bump isn’t feasible, consider supplementary side incomes through freelancing, consulting, or starting a small business utilizing your skills. Multiple income streams help counter inflation.
Have ongoing salary discussions with managers, not just annually. Open communication regarding economic conditions and pay benchmarks helps set expectations on both sides.
The current economic climate makes attaining inflation-matching salary increases exceptionally challenging. At Victus Search, our experts help professionals understand the latest salary benchmarks and find new roles that can provide the level of pay growth needed to maintain their standard of living. We tap into our extensive networks to identify opportunities offering strong earning potential even amid high inflation. Contact us today to explore new possibilities that will put you on steadier financial footing. Our team can serve as a trusted partner in navigating the inflation and wage growth dilemma.
Whether you’re looking to fill a specialist role, or seeking the right position to deploy your unique skills and experience, the first step is to get in touch with one of our expert consultants.
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