The National Office for Statistics reported last week that UK wage growth has been high at an average 5.6% over three months from December to February.
An overwhelming 92% of business leaders told Startups.co.uk that they feel positive about the year ahead in general. However, optimism varies dramatically depending on the industry.
UK tech firms, known for offering large wage packets to entice talent, displayed the most confidence with 80% of businesses in this industry saying they’d be likely or very likely to accommodate pay rises.
Meanwhile in the low-wage hospitality and retail sector, where staff shortages have made employees hard to recruit, optimism stooped significantly lower.
Just 19% of restaurants and cafes said they’d be unable to meet employee pay expectations this year. The UK’s recent National Living wage rise which increased to £11.44 an hour at the start of April, up from £10.42, may add to existing budgeting concerns.
Startups.co.uk’s Lead Writer, Helena Young, comments: “Employers are clearly awake to the financial hardships today’s workers are facing, and our research shows the majority are prepared to offer a sizable payday jackpot to help them weather the storm. Such generosity might be tempered by economic pressures, however. While no worker would turn down a pay rise, the reality is that a pay rise is only good news if the business can afford it.
“Money troubles present a particular challenge for low-wage sectors, such as hospitality, where concern about staffing costs is already high. Here, organisations will need to find that sweet spot between rewarding and retaining talent with smart budgeting decisions.”
The Startups.co.uk survey additionally showed that 24% of business leaders named the economy as the most likely factor to impact their business confidence. Many business owners have been forced to shift their focus from growth to simply maintaining cash flow. 40% reported cutting costs by streamlining operations, while 36%opted to raise prices in response to anticipated lower consumer spending.
However, with recent reports suggesting that the British economy is stepping out of recession, business leaders may have reason to increase both their business optimism and their confidence in the British economy for the year ahead.