UK salaries continue to grow

Will UK Salaries continue to grow at the current rate?

UK salaries continue to grow due to a myriad of economic, social and political factors but will this growth continue, and what does the future hold? We analyse how we got here and predictions for the years to come in answer to that very question.  

To grasp what’s ahead, it’s important to look back at trends and analyse how they’ve evolved. From 2013 to 2023, the UK’s salary growth has, at times, been unpredictable and marked by periods of both acceleration and moderation.  

In the early 2010s, post-recession recovery led to gradual increases in average salaries but the growth was often outpaced by inflation, with some years seeing real-term stagnation. The average annual salary growth during this period hovered around 2-3%, with fluctuations depending on the sector and region. 

The latter half of the decade brought more pronounced changes as uncertainty surrounding Brexit, followed by the unprecedented impact of the COVID-19 pandemic, made waves in the job market.  

Initially, salary growth slowed down, reflecting the economic uncertainty, but as recovery began post-pandemic, and with the added dynamics of Brexit affecting labour supply, there was a noticeable shift. By 2023, salary increases had become more significant – often reaching above 5% – and driven by factors like government policy changes and inflation. 

But will UK salaries continue to grow at the same rate as recent years, or are we heading towards a period of moderation? This blog seeks to explore these questions by examining current trends, economic forecasts and sector-specific insights, with a particular focus on the dynamic FMCG industry.  

THE SALARY LANDSCAPE 

A Look Back at 2023 

This year has witnessed substantial salary growth in the UK, driven by factors such as government policy changes, inflation and sector-specific developments. Growth rates peaked at 7.8% in June to August 2023, one of the highest rates since records began. But, as the economy stabilises and inflation steadies, this growth is slowing. 

Predictions for 2024 

Moving into 2024, salaries are expected to remain robust at around 4.5%, although many employers are cautiously waiting to make final decisions. This slight decrease from the 5% average in 2023 reflects a response to anticipated reductions in inflation. The balance between addressing cost-of-living pressures and maintaining sustainable business growth is a delicate one which employers will continue to navigate​​. 

The Inflation Factor 

Inflation, a key driver of recent salary increases, is expected to slow down. The Bank of England projects a return to the target inflation rate of 2% by the end of 2025. This normalisation should ease the upward pressure on salaries that we’ve seen in response to high inflation rates​​ this year​​​​. 

Looking Ahead to 2025 

As we turn our gaze towards 2025, the salary landscape appears to be aligning with broader economic stabilities. While specific forecasts for 2025 are not yet fully defined, the expected decrease in inflation could lead to more moderate salary increases compared to the recent years. 

Sector-Specific Trends 

Different industries may witness varying trends, with sectors with high demand but skill shortages, such as technology and renewable energy, are likely to see continued salary growth while, conversely, traditional sectors may experience more modest increases. 

WILL UK SALARIES CONTINUE TO GROW IN THE FMCG INDUSTRY? 

While the overall trend for UK salaries suggests more moderate increases, the story differs when we look into specific sectors and FMCG presents a unique case.  

In recent years, the FMCG industry has experienced a surge in demand, partly driven by changes in consumer behaviour and technological advancements. This has led to a heightened need for skilled professionals in areas such as digital marketing, supply chain management and e-commerce. As a result, salaries in these disciplines have seen notable growth, a trend likely to continue as for these high-demand skills. 

That said, as with the broader market, the FMCG industry is not immune to economic pressures. Factors such as inflation and global supply chain disruptions can influence salary trends. Companies in the FMCG sector may need to balance competitive salary packages with the ever-present need for cost-efficiency and adaptability in a highly-competitive market. 

For professionals in the FMCG sector, this represents an opportunity for career growth, particularly for those with specialised skills which align with the industry’s evolving needs. Employers, on the other hand, will need to stay in tune to these market dynamics to attract and retain top talent, ensuring salary structures are competitive yet sustainable. 

UK SALARIES CONTINUE TO GROW BUT PACE SLOWS 

UK salaries have seen a significant rise in recent years but the pace of this growth is likely to slow as we move forward. The predictions for 2024 and the expectations for 2025 suggest a shift towards more sustainable growth rates, influenced by economic stabilisations and sector-specific dynamics. 

As experts in the FMCG job market, Signature is adept at navigating these complexities. We understand the nuances of the industry and are well-equipped to provide insights and strategies for both employers and professionals in aligning career aspirations with the right compensation. 

Staying informed and adaptable in the face of these changing trends will be key, for employers and professionals alike. As always, Signature is here to offer expert insights and guidance in navigating the evolving landscape of the UK job market. 

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