Pinnacle’s Steve Rogan looks at the question of salary increases
The salary question is always an awkward one, but sometimes when you’re hungry, you need to ask for more. We are convinced that an increase in salaries will give a boost to companies, the economy, and is also a key factor in the overall health and sustainability of the housing industry. So our question is simple: is it now time wages started to rise?
To help our industry, we really need people to be able to invest in either buying a home, refurbishing their home or building an extension. Funds and confidence are needed in equal measure to enable this to happen. But where are the funds?
The recent Reed Job Index survey revealed that employee pay packets remained at the same level as they did this time last year and 4% lower than they were when the Index began in 2009 – that is a long time.
When you consider that energy suppliers have just announced another large price increase and transport and travel costs have also risen significantly risen, it makes the reported rate of inflation at just under 3% hard to believe. We are expected to invest, but we are not being given the resources to do it.
House prices are starting to rise again, but with wages decreasing in real terms, ownership of a home, for some, will just be a dream, despite the best intentions of the Help to Buy scheme. If the situation does not change, then we are in real danger of the recovery being short lived.
Most people over the last few years have realised that foregoing a salary increase or accepting a very low one is helping their employers and keeping their jobs secure. However, if this state of affairs continues for too much longer it may have a negative effect, creating resentment, demotivation and causing the good employees that should be retained and developed to look for another job – especially with our sector and the overall labour market now on the rise.
We would never advise companies to commit to what they can’t afford, but we believe that perhaps now is the time for employers in all sectors of the economy to reward their employees with a well-deserved pay increase. We are all going to be very busy in the coming months and expectations will be high, so motivate your employees and thank them for helping you through the tough times. It has been a team effort getting through the past few years, make sure it is an enjoyable team effort over the next few years.
We are reminded of a company that gave everyone a large bonus each year – regardless if they were the cleaner or the Sales Director. Rather than being over generous, the truth of the matter was they saved on the cost of having to replace good quality staff, training and the cost of errors in the sales office, the warehouse and accounts.
The employees were always knowledgeable and experts in their fields, and this allowed the company to continue to recruit new people, but for growth. A good policy in hindsight, employees were happy, motivated and respected, and the company saved on costs, but spent on adding to their team through recruiting additional members of staff that complemented and enhanced an already established and successful team.
There are many ways to look at this difficult topic, but the question remains: should employees throughout all sectors be given a pay rise at their annual review, allowing them to invest in the economy and be inspired to achieve more in their jobs? Surely the company, country and employee will benefit?
Steve Rogan is managing director of Pinnacle Consulting, specialist recruitment consultants for the building products industry.