Pay confidence in the UK workforce increased 70.1 points in the second quarter of 2023, according to the latest Robert Half Jobs Confidence Index (JCI).
The rise in the index – an economic confidence tracker produced in partnership with the Centre for Economics and Business Research (CEBR) – means pay confidence has returned to positive territory for the first time since Q2 2022.
According to the report, the key driver of the confidence rise has been the positive growth of real wages. In addition, some 60% of employees reported last month that they are confident about their job looking ahead to the next six months, and 41.9% of those surveyed said they were confident about their future career prospects.
Despite the positive outlook, Matt Weston, senior managing director UK and Ireland at Robert Half, warned that the “unprecedented” confidence in job security, pay and career progression was placing significant pressure on a labour market suffering from systemic skills shortages.
He said: “We are witnessing a perfect storm. Employee mobility is high, as self-assured employees, aware of low unemployment rates, seek greater working environments or remuneration elsewhere. The affected businesses consequently need to deal with such talent loss in a tight market, fuelling the wage spiral we are seeing today.”
Weston also warned that business leaders might be less willing to accommodate higher pay expectations going forward. “However, the elevated worker confidence could mean many will not hesitate to jump ship should they feel their earning potential is not fully met,” he added.
To address the problem, “non-financial and bottom-line friendly retention strategies” could help prevent further wage inflation, Weston said.