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Employment

How much should my pay rise to beat inflation?

With latest figures showing inflation outpacing pay across the economy, it might be time to ask for a (higher) raise.

With National Insurance contributions going up, a council tax hike, inflation increasing, energy bills sky-rocketing and a cost of living crisis pushing up the prices of every-day essentials, many of us will be looking for a pay rise to cushion the blow. 

Three in four workers in the UK are considering changing jobs due to the cost of living crisis, and the widespread labour shortages in sectors ranging from health to hospitality, make now a good time to take advantage of  those record unfilled vacancies

Recent YouGov polling found that of the 40 per cent of people who asked for a pay rise, just over a quarter succeeded. However, just one in five women who ask for a pay rise are given one, compared with just under a third of men – just one of the factors contributing to the gender pay gap

We asked a career expert with over 12 years experience signing off on pay rises at a leading UK bank how to ask for the pay rise you need. 

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Who is getting a pay rise this year?

Latest official figures show that average pay across the economy increased at an annual rate of 4.8 per cent from November 2021 to January 2022. But with inflation rising to 7 per cent in March 2022, wages are not keeping up soaring costs. 

MPs are getting a pay rise of £2,212 which is a 2.7 per cent increase on the last financial year. The rate was calculated to match the average increase in public sector earnings, and is implemented by the Independent Parliamentary Standards Authority.

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Civil service pay rises have been capped at 3 per cent, with unions furious at the decision they say shows ​​‘utter contempt’ for a service that has worked through the pandemic.

The government recently proposed a three per cent pay uplift for NHS nurses and other health workers in England for 2022-23, yet unions have angrily responded that as this is below inflation, it amounts to a real-terms pay cut. The Royal College of Nursing is demanding a five per cent pay rise above inflation. 

Tesco recently announced it is hiking hourly wages by 5.8 per cent from £9.55 to £10.10 from July, this is up from a 2.7 per cent pay rise in 2021. The agreement was reached after negotiations with the Union of Shop, Distributive and Allied Workers (USDAW).

How much of a pay rise should you ask for? 

Inflation stands at 6.2 per cent as of February 2022, but economists have predicted that it could spike to 7 per cent in April, and even rise to 9 per cent by the end of the year. Any pay rise at or below this rate is equal to a real terms pay cut. So you might wish to request a percentage rise to match inflation, and an additional amount to reward your achievements. 

The Office for National Statistics’ pay rise calculator figures out what your pay should increase to according to the current rate of inflation, which it has set at 5.5 per cent.

However, while it might be tempting to justify your request for a pay rise on the increasing cost of living and inflation, career coach Samantha Lubanzu suggests steering away from this to focus on your individual value. 

Lubanzu, who has 12 years experience working as a HR Business Partner at Barclays Bank, explained that sadly, rising inflation is something that everyone is facing, so should not be the basis for your request. 

“Most organisations will be having their HR team working on how they can bring their pay up in terms of inflation rises,” she said. This has traditionally been at a rate of 3 per cent, though this is well below current inflation rates. 

When calculating the rise you want, she recommends looking at what competitor organisations are paying, alongside inflation, the cost-of-living, and what you need to live the lifestyle you want. Make your request in terms of a percentage rather than an amount of money, she adds, as this is the language the finance or HR team will use. 

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How to ask your boss for a pay rise?

When it comes to having the conversation, Lubanzu suggests sending your line manager a short email requesting a one to one meeting to include a salary conversation. It’s best to do this face-to-face, or atleast over video call. 

“The main thing is to focus on what you’re personally bringing to the role,” says  Lubanzu, who suggests asking yourself: What do you bring to the role? How can you demonstrate that you’ve been consistently performing highly? And what can you, and only you, do for the organisation?

“You need to focus on your individual contribution to the organisation and how that differentiates you to competitors outside the organisation, so the reasons why they don’t want to lose you,” she continued.

​​To prepare, you could write a script and practice by recording yourself on your phone and listening to it back.

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What to do if your request for a pay rise is denied

If the answer is no, your number one reaction should be to ask for a detailed justification for the decision, and ask what would make it a yes in future, says Lubanzu. 

Stay positive, thank them for their consideration, and put in place steps you can take to go back in a few months time with an even stronger case. 

It is important to remember, too, that other company benefits can offer value to your working life beyond income. Lubanzu recommends thinking about what other benefits the company could offer you that they might be more willing to concede on. 

“It’s really important to understand that money is never really the main driver for individuals to stay in an organisation, there are so many other benefits they need to look at,” she says. 

The need for a comprehensive sick pay policy has been drastically highlighted over the pandemic, with statutory sick pay (the minimum amount set by the government that employers must pay), woefully inadequate for anyone to live on. 

While your company may deny a pay rise, they may concede to increasing your holiday allowance or improving sick pay policy, or introducing policies to support employees going through the menopause, experiencing bereavement or juggling care commitments. 

Allowing flexible working, funding a qualification or allowing a sabbatical, are other ways to boost staff wellbeing that might make staff more eager to stay. 

And if a pay rise isn’t possible, a cut to working hours in the form of a four day working week, could be a card to play. 

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