The Great Rethink Survey

83%

of organisations are considering some kind of response to the cost of living challenge
82%

of respondents operated 2022 pay budgets between 1.5% and 4.5%
78%

respondents are addressing talent scarcity and attrition with reward and pay budgets

The emerging cost of living crisis has highlighted the need for employers to think creatively about ways to attract and hold onto talent. At a critical time, we are seeing many organisations considering their immediate response to the cost of living crisis whilst planning for longer-term change to talent, skills and reward programmes.

Rising levels of inflation coupled with fears of a global recession and geopolitical uncertainty mean that employers are navigating through a complex external landscape. At the same time, many organisations continue to face unprecedented levels of labour and skills shortages. All of this is happening as the workforce continues to undergo radical transformation accelerated by the global pandemic.

Skills shortages and high attrition rates are here to stay. Our report discusses the need for organisations to take a more flexible and innovative approach to pay and conditions and invest in longer-term programmes linked to purpose, career paths and skills acquisition in order to remain competitive.

“We are seeing the conflation of two major employment issues - the rising cost of living and skills shortages. Almost one in five UK workers say they are going to quit their job in the next 12 months so it is no surprise that talent retention is a top priority for employers. In the current economic climate, employers need to consider how to target spending to have the most impact on workers. A more flexible and innovative approach to reward and working conditions will be critical, but so will programmes that hold onto talent for the long haul. Organisations are investing in programmes focused on wellbeing, flexible working patterns, career ladders, and new and more personalised benefits.

We are some way off the peak of inflation and organisations will need to have a lot of tools at their disposal to weather this in the months ahead, while trying to manage costs as the economy slows. Despite the difficult economic conditions, we expect organisations to continue to find ways to support staff and, where sustainable and affordable, agree pay budgets for 2023 at a level not seen for decades.”

_{Alastair Woods, Pay and Employment Partner at PwC UK}

Other key findings from the survey include:

Employers report that the main challenges to attracting new talent are a lack of external supply (85%) and the time it takes to recruit (47%)
Over half (56%) of respondents are retraining and upskilling their current employees to fill key skills gaps
Around a quarter (26%) are sourcing international talent, or looking to access or share talent with other institutions (25%)
13% are making greater use of contractors or gig workers
Over 79% of respondents are looking at ways to reduce workforce costs and 97% are aiming to improve productivity
53% are investing in new technologies, 41% are considering increased automation, and just over a third (35%) are thinking about their location strategy within and outside of the UK.