Employees complain that their pay isn’t keeping up with the rise in inflation’s ascent and that their financial stress is also rising as a result, despite inflation continuing its upward trend. 80 percent of workers, according to recent statistics, feel their current pay is not keeping up with inflation. In a recent report, one of the well-known organizations questioned 1,100 international professionals. The result is hardly unexpected, given the recent spike in inflation.
Consumer Price Index (CPI) growth for the last year in November was 7.1 percent, which is still high but represents a significant drop from the record high of 9.1 percent for the same year in June. While the rate of growth may be moderate, it is obvious that the substantial spike in inflation over the past year has harmed employees, who are now paying more for expenses like housing, food, petrol, and medical care.
Mr. Varun Khosla, MD at Dynamic Staffing Services, a recruitment firm, stated that financial stress and decisions made by employees both on and off the job are being significantly impacted by inflation and worries about a recession.
Employees claim that worries about inflation and the recession have changed their career and financial choices, with many opting for higher-paying employment or side projects to supplement their income. Inflation not only increases financial stress and causes workers to be unsatisfied with their earnings, but it also affects workers’ perceptions of their ability to make ends meet.
According to the report, almost half (47%) of respondents indicated these worries had motivated them to pursue or begin looking for higher-paying work. In that survey, it was also discovered that 31% had created a side business or begun freelancing, while 23% had increased their spending on savings or contributions towards their emergency fund. In addition, 45% were adhering to stricter personal or household budgets.
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It was mentioned that HR professionals who are already having difficulty navigating the competitive labor market of a changing global economy may find the widespread possibility of career changes to be especially concerning. Inflation and the employee-driven labor market have led to higher-than-normal salary increases from employers. For example, an American consulting firm found that US employers plan to raise average pay by 4.6 percent in 2024; the results are up 4.2 percent from this year.
From other sources also it is shown that incomes are rising. Nearly half of American businesses anticipate larger year-over-year budget increases in 2019 than in 2023. This is confirmed by o yet another major analysis that questioned 1,000 HR professionals. In addition, the research firm Gartner discovered that 63 percent of CEOs want a change in their salary in response to high inflation.
According to BLS statistics, the seasonally adjusted real average hourly wages for all employees increased by 0.5%. Nevertheless, these wages declined by 1.9% annually.
However, many workers still believe that the raises aren’t substantial enough because their salaries lag behind the cost of living. According to that same report, employers are aware that high inflation reduces the purchasing power of money and devalues wages. It also agreed that price increases to offset costs can result from rising wages to keep up with inflation, creating a vicious cycle.
Other actions companies may take, in addition to what experts advise employers to do, which is to take a closer look at salary as well as bonus and other financial support options to help allay employee fears about inflation. Employers ought to conduct market analyses for their jobs in order to ensure they are paying employees fairly.
Due to growing market competition, some positions may experience pay rises above the inflation rate, while others may only get small raises to reward workers “on merit” and motivate them to stick with the company. Organizations should not undervalue the significance of pay communications.
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According to Mr. Varun Khosla, creating a positive company culture and making strong efforts to retain top talent—including paying fairly, providing flexibility like remote work options, promoting from within, offering competitive benefits, providing career development opportunities, and establishing a feedback loop for employees—can all help retain employees during uncertain times. As employees deal with rising prices, financial wellness perks, and support are particularly in demand right now.
It’s a great opportunity for HR teams and leaders to remind and reassure employees about the value they provide to their organization when this pressure is on so many workers’ minds, especially if you work in a remote or hybrid environment, according to Mr. Varun.
The need to express gratitude, lead with empathy, and praise employees’ contributions at all levels go beyond simply offering financial wellness assistance, bonuses and compensation, and cost-of-living hikes. Small, deliberate actions like these can increase employee engagement and loyalty over the long term, as well as make workers feel safer in their career decisions.
After analyzing the factors that contribute to the nonprofit pay gap, it is clear that there is no one-size-fits-all solution. However, one thing is certain organizations must prioritize fair and competitive compensation in order to attract and retain the best talent. This is where recruitment agencies like Dynamic Staffing Services come in.
By collaborating with a recruitment agency that is aware of the current market and pay sector and its unique challenges, organizations can access a wider pool of qualified candidates and receive guidance on compensation trends and best practices. With the right support, organizations can bridge the pay gap and continue to make a positive impact in their communities.
If you need any further assistance or guidance, don’t hesitate to reach out to us at +91-11-40410000 or enquiry@dss-hr.com. Also, you can sign up for our newsletter to receive the latest updates on new jobs and market trends.
Contact us today: Dynamic Staffing Services.
