Inflation in the UK economy has reached near 40-year highs. According to CPIH, a measure of the costs affecting households, the price of food, fuel, and other everyday items rose by more than 9.2% in the last 12 months.
As household budgets get squeezed, it’s understandable that many people are seeking a pay rise in order to maintain their current standard of living.
This creates a different kind of conversation about salary – one that’s not about increasing how much you earn, but about keeping up with what you used to be able to afford.
Here we’ve shared our top tips for negotiating your inflationary pay rise, including our Keeping Up calculator.
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Companies are under increasing pressure to give their employees inflationary pay rises as the cost-of-living crisis strikes.
In most cases, there will be a set process for granting pay rises, and it’s worth understanding that in advance.
Speak to your manager or the HR team, ask when pay reviews happen – and ask if the company already takes inflation into account when setting salaries. This is also a good moment to find out what opportunities there are for personal growth and make sure you know what expectations there might be.
Understanding the pay rise process gives you the best chance of finding the right time to make your case.
A high proportion of people haven’t had a pay rise, or their pay has risen by less than the rate of inflation.
To justify the extra cash you’re asking the company to stump up, you’ll need to prove that you deserve more money.
It’s time to blow your own trumpet and demonstrate that you’ve earned it with a convincing business case – show that you’ve been working at a higher level, that you’ve hit your goals, and that you’re a valuable member of the team or that you’re prepared to take on more responsibility.
Don’t forget to mention your soft skills – they’re important too.
Do your research. Inflation can be a cold and abstract thing to discuss. But the impact on your purchasing power is absolutely material.
Tools like the ONS personal inflation calculator can help you get to grips with how you’re individually affected by rising prices. And remember, tax thresholds could have increased with inflation, but they were frozen in the Autumn Statement of November 2022. This means that, in real terms, anyone who’s salary has remained the same will see their purchasing power reduced, and their standard of living fall behind.
Our Keeping Up calculator will help you figure out exactly how much you’d need to get paid just to maintain your current standard of living. This will depend on your individual circumstances, and it will be even more accurate if you have worked out your personal inflation rate in advance.
Other factors to consider: make sure you know the current market rate for your role, and how much other companies are offering.
Once you’ve understood your company’s pay rise process, collected your evidence, worked out what you’re asking for to keep up with inflation, you’re ready to have a conversation with your manager.