Employers Set to Reduce Pay Rises Amid Rising Employment Costs
A new survey by Towers Watson has found that 33% of employers plan to implement smaller pay rises in 2025 on account of the increase in employers’ national insurance contributions, which take effect in April 2025.
From the 6th April 2025, employers secondary class 1 national insurance contributions (NICs), together with Class 1A and Class 1B rates, on an employee’s earnings above £5,000.00 per annum / £96 per week (threshold down from £9,100.00 per annum / £175 per week) will increase from 13.8% to 15%.
The findings of the survey were:-
- 33% of UK employers plan to reduce pay rises in 2025
- Salary budget decreased by approximately 1% for affected employers
- Planned pay rises expected to average 3% after reductions
- Changes in the level of pay rises driven by increased employer national insurance contributions (rising to 15%) and the reduction in the national insurance threshold from £9,100 to £5,000
- 41% of respondents will increase scrutiny around hiring
- 28% of employers planning cuts to employee headcount
- 8% of respondents implementing hiring freeze
- Part-time roles particularly at risk, especially in retail sector, with British Retail Consortium predicting 1 in 10 part-time retail roles could be lost
- Employers are also reviewing pension salary sacrifice arrangements and looking to reduce non-monetary rewards
- Key and high-performing employees are likely to receive larger pay rises, with other staff ending up with below-inflation increases
- Average pay rises likely to align roughly with inflation, meaning that there will on average be no real terms increase in pay
- Employers exploring alternative reward strategies to compensate for reduced raises
Commenting upon the findings, the senior director at Towers Watson, Lindsey Clayfield, stated: "We were starting to see salary budget increases moving down towards pre pandemic levels, and the change to the Employer National Insurance contributions has accelerated this. We are now seeing salary budgets more aligned to the 3% we last saw in 2019."
Survey Finds Ageism Is The Most Prevalent Form Of Workplace Discrimination
A new report that has just been released by Ciphr has found that ageism is the biggest cause of discrimination in the workplace.
The report found that:-
- 45% of UK adults have experienced workplace discrimination (38% in workplace, 39% during job applications)
- Ageism emerged as the most prevalent form of discrimination, with 19% of the workforce having encountered age discrimination either at work or when applying for a new role. Moreover, 17% of men and 14% of women stated that they had been the victim of ageism when applying for jobs.
- 13% of respondents stated that they had encountered appearance discrimination, whilst 12% had experienced gender discrimination. Moreover, 11% reported that they had suffered discrimination due to their parenting / carer commitments
- 9.3% stated that they had experienced race / ethnicity discrimination, whilst 8.2 reported that they had been subjected to disability discrimination
- Workers are most likely to encounter discrimination at the outset of their careers
- 65% of 18-34 year olds stated that they had experienced discrimination, compared to 45% of those aged between 35-54, and 31% of those aged 55 and over.
Commenting upon the findings, the chief people and operations officer at Ciphr, Claire Williams, stated: "The results from Ciphr’s survey are a stark reminder that there’s still much work to be done to tackle ageism, racism, sexism, ableism, homophobia, religious bigotry, and the many other harmful types of discrimination experienced in UK workplaces, and around the world, today.....Any form of discrimination....can have a huge negative impact on people’s lives. It can take a considerable toll on their mental and physical health, and their self-esteem, and be incredibly stressful to cope with. It can also derail careers, with unfair dismissals or people not being given equal opportunities to progress and be paid fairly."
