The impact of Brexit on salary expectations

Karen Young, director at Hays Accountancy and Finance, explores the effect of Brexit on salary expectations

It’s been almost a year since the result of the UK’s European referendum was announced. Understandably, there have been high levels of uncertainty across the UK in the wake of the news.

For the finance jobs market, the overall outlook, however, is positive and 93% of finance businesses expect activity levels to increase or stay the same this year, irrespective of Brexit.

Since the start of 2017, recruitment has actually been on the rise across a wide range of organisations, varying in size and sector, even versus the close of 2016.

In contrast with this optimism, findings from a recent report revealed that the same levels of confidence are not shared by finance employees. Many believe the vote to leave the EU has dented opportunities for pay rises and career progression.

Salaries see moderate rise

Salaries for finance professionals increased on average by just 1.4% in 2016, according to the Hays Salary Guide, below the 1.7% increase in 2015 and below the UK average of 1.8% in 2016.

This overall number masks the fact that some roles did see bigger salary increases, including credit management, with professionals getting an average increase of 3.6%, and accountancy support seeing an average increase of 3.5%, part-qualified accountants receiving 2.1% and payroll a further 2%.

Professionals with knowledge of big data, data analysis and the ability to interpret data for business operations are poised to be sought after this year.

As technology becomes increasingly prevalent within businesses across all sectors, these skills are likely to warrant a significant salary increase in the coming year.

Following the referendum, the number of finance employers who said they expect to increase salaries for finance professionals in 2017 went down to 67% compared to 74% pre-referendum, while only 21% of employers said they had plans to increase salaries by more than 2.5% this year.

According to research from the Hays…., staff doubts could have an effect on staff retention, as almost two thirds of finance employees said they are planning to move jobs this year. The top-ranking reason for wanting to move was a lack of future opportunities, at 30%.

Before the referendum, 57% of finance employees said they felt there was no scope for career progression within their organisation – by September 2016 this number had risen significantly to 67%.

More than half of the finance professionals surveyed were dissatisfied with their pay and this was the second most-cited reason, after lack of future opportunities, for wanting to move jobs.

The research also revealed that concerns about job security increased from 9% to 13% after the referendum, when professionals were asked their top reasons for moving jobs.

When employers were asked what their top challenges were likely to be for recruiting in 2017, 37% of employers stated applicants with unrealistic salary requirements.

Employers are likely to come under intense pressure this year as they look to hire and retain the best professionals, with more selective and gradual salary increases for key strategic appointments.

Organisations are looking to build their teams to enable long term growth and with Article 50 already triggered, it’s no surprise they are keen to build strong teams that can withstand changing times.

What to expect for the year ahead

While the referendum has been reason for concern for many, the dust is beginning to settle, and things are starting to look up.

Looking ahead to the rest of 2017, there is good news for finance professionals who are considering a job move. Thanks to on-going business change, corporate deals,  and companies relocating, the demand for financial professional looks set to remain consistent in 2017.

Skills shortages will continue to cause concern this year, regardless of economic conditions, so employers will need to review the speed and agility of their hiring process so as not to lose out on talented individuals.

Skills shortages may also command an increase in salary for specific roles and skills, so employers need to work on managing expectations and offering reasonable salaries.

s employers feel the pressure to increase pay beyond their expectations and develop clearer career paths, many will need to review their reward and benefit packages and look at other ways, aside from salary, to attract the talented individuals they are looking for.

To meet post referendum business challenges, moving away from a “one size fits all” approach is necessary.

Karen Young is director at Hays Accountancy and Finance