London Daily

Focus on the big picture.

Only 3% of firms in Europe to boost salaries in line with inflation

Only 3% of firms in Europe to boost salaries in line with inflation

Record levels of inflation have seen the cost of living rise across Europe this year but only a handful of companies will raise salaries in line with inflation, a new study has found.

According to data from British HR company Figures, only 3.4 per cent of companies in Europe plan on matching salary raises with inflation.

While the numbers show 35 per cent of those companies are planning to increase salary budgets in response to rising inflation, the vast majority have not committed to keeping up with the rate of inflation - meaning for most employees, their paycheck won’t go as far as it did before.

Out of the companies that aren’t raising salaries in response to inflation, one fifth said they will be sticking with their current salary structures, while 44 per cent said they were holding off for the time being to see what the economic outlook is further down the line.

Almost half of the companies surveyed plan on capping any budget increases at 5 per cent.

The companies that were most likely to increase salaries in response to inflation were bigger, more established ones, while smaller companies and startups were most likely to hold off.

“Our research reveals that business leaders are split on how to handle inflation on a global scale, and with so many options on the table – from bonuses to salary raises, benefits and more – it’s little wonder,” said Virgile Raingeard, CEO and co-founder of Figures.

“Organisations can’t tackle inflation but they can tackle how they respond to it with a robust plan built on communication, benchmarking, processes, and education.

“In such a critical period, the actions organisations take now will determine their future. Those who fail to act are likely to risk losing the trust of their workforce — not to mention their workforce itself”.

For the study, Figures spoke with leaders from companies in works with in countries including France, Germany and the UK

HR company Oyster has decided to do twice-yearly salary evaluations.

“We’ve seen employees asking more about whether salaries would be adjusted due to inflation, citing impacts to their day to day lives, and the concern that without a salary change, their purchasing power would be reduced,” said Kim Rohrer, Head of People Experience at Oyster.

“The biggest challenges we have to think about are scalability and sustainability — how can we continue to compensate competitively and fairly without being purely reactive to market changes?”

Julio Hailu, Head of People and Culture at AREX Markets, told the Figures researchers his company was focused on minimising employee turnover due to salary issues - but it is a balancing act.

"My biggest concern is being able to maintain my staff's spending power while having a limited budget — either you can afford it or you can't. We can't lose sight that businesses also bear the brunt of the current situation,” he said.

Keeping up with inflation

Inflation has been rampant this year across Europe. In the eurozone it hit 10.7 per cent in November, while in the UK it fell to 10.7 per cent from a 41-year-high of 11 per cent the previous month.

But while inflation is increasing, with the cost of living, increasing wages can cause a wage-price spiral, meaning when employees receive a wage hike they demand more goods and services which causes prices to rise even higher.

In the International Monetary Fund’s October economic outlook the risks of a spiral are limited—so far due to the central bank’s tightening monetary policy and falling real wages.

Almost half of the companies surveyed intend to increase budgets by 3-5 per cent - way below inflation.

One third of the companies intend to increase budgets below 3 per cent, and 15 per cent are increasing them between 5-10 per cent.


Related Articles

London Daily
Netanyahu Denounces World Court Ruling on Israeli Occupation
Adidas Drops Bella Hadid Over Controversy
Global Outage Caused by CrowdStrike Update Impacts Millions
Massive Flight Cancellations Across the U.S. Due to Microsoft Outage
Global Windows Outage Causes Chaos Across Banks, Airlines, and More
Russia Accuses Ukraine of Using Chemical Weapons
UK's Flawed COVID-19 Planning Exposed by Inquiry
Ursula von der Leyen Wins Second Term as European Commission President
Police Officer Injured in Attack in Central Paris
Hulk Hogan absolutely tore it up at the RNC.
Paris is being "cleansed" of migrants and homeless people ahead of the Olympics.
Lamine Yamal arriving at his school after winning the Euros
Campaigners Urge UK Government to Block Shein's London IPO
UK Labour Government's Legislative Agenda
UK Labour Government to Regulate Powerful AI Models
Record Heat Temperatures in Ukraine Amid Power Crisis
UK Government Plans to Remove 92 Hereditary Peers from House of Lords
King Charles III Delivers Labour Government's First King's Speech
Officials Remove 'Disastrous' Label from Liz Truss's Mini-Budget
Keir Starmer Outlines Ambitious Plans for Government
Japan to Allocate $3.3 Billion to Ukraine Using Frozen Russian Assets
EU Parliament Condemns Hungarian PM's Russia Visit
FBI Struggles to Find Motive Behind Trump Shooting Incident
Kremlin Criticizes EU Rejection of Orban’s Ukraine Peace Proposal
Google and Microsoft Now Consume More Power Than Several Large Countries
Secret Service Criticized for Lack of Sniper Protection During Trump Shooting
US Senator Robert Menendez Found Guilty of Corruption
Deep Concerns about Political Violence as US Approaches Election Day
Trump Media Shares Surge Following Re-Election Bid Boost
The gunman who attempted to assassinate Donald Trump Saturday is 20-year-old Thomas Matthew Crooks
Banksy's Influence on Port Talbot's Street Art Scene
Bodies of Two Men Found in Suitcases on Bristol Bridge, 24-Year-Old Arrested
Kate Middleton to Attend Wimbledon Men's Final Amid Cancer Recovery
Russia's Electronic Warfare Neutralizes Western Weapons in Ukraine
Trump Challenges Biden to Debate and Golf Match
Macron Accuses Israeli Minister of Election Interference
US Senator Highlights Weaknesses in Western Military Industry During Ukraine Conflict
George Clooney Urges Biden to Withdraw from Presidential Race
Political Shift in the UK: A Detailed Analysis of Labour's Victory and Future Prospects
Viktor Orbán's Peace Mission: A Diplomatic Controversy in the EU
India Advocates Peace and Prosperity: PM Modi's Speech in Austria
New UK PM Keir Starmer Reaffirms Strong Support for Ukraine at NATO Summit
Spain PM Pedro Sanchez Denounces Double Standards on Gaza at NATO Summit
UK Police Arrest Suspect in Crossbow Attack After Three Women Killed
Sunita Williams Safe on ISS, to Address Earth on July 10
Biden Affirms Commitment To Presidential Race
France Faces Political Turmoil and Airport Strikes Ahead of Paris Olympics 2024
Putin Hosts PM Modi for a Private Meeting
TSMC: The Taiwanese Chip Giant Valued Over $1 Trillion
Boeing Pleads Guilty Over 737 MAX Crashes