The Salary Squeeze: Cost of Living and the IT Industry
The Rising Cost of Living
According to Totaljobs’ Salary Squeeze report, 1 in 3 people are considering changing jobs this year to combat rising living costs.
No matter what industry you work and hire in, it’s hard to ignore the rising cost of living, and its effects on your workers. 47% of UK workers now consider themselves to be living ‘payslip to payslip,’ and experts estimate that taking out loans to fund basic living expenses for the first time has left the average worker £1,756 in debt.
This trend shows no signs of slowing down, either; the
Institute for Fiscal Studies estimates that the average UK worker will be
around £13,000 worse off annually by the middle of the 2020s. So, what impact
does this have on the IT and digital industry? And how do you navigate this
increasing pressure as an employer? We’re breaking it down.
Fair pay tops the list of important things candidates consider for a role, with most citing a pay rise at least in line with inflation as one of the most important factors in their job.
How is the IT industry changing?
According to a Totaljobs study, fair pay tops the list of important things candidates consider for a role, with most citing a pay rise at least in line with inflation as one of the most important factors in their job. Flexible working hours came second, followed by generous annual leave and hybrid working. So, with 30% of UK workers feeling their salary doesn’t cover their basic living costs, it’s unsurprising that the cost-of-living crisis is causing a higher rate of employee turnover.
But what does that mean for the IT industry? Well, according to the Totaljobs career change tracker, the number of IT job changes - that includes people entering the sector, moving within it, and moving out of it - grew by 172% between 2015 and 2022. This rise can be partially attributed to general sector growth, but rising costs and desire for better remuneration packages are likely contributors too.
Things become even more interesting when you look closer at
the breakdown of total job changes. Workers joining and leaving the industry in
2022 were 24% and 21% respectively, meaning there’s an overall increase in the
total number of IT workers. However, the top four industries that workers are
moving both from and to are the same - consulting, engineering, marketing, and
sales. So, if the same industries are both losing workers to IT and attracting
them away, what’s the reason for the change? Well, it’s more likely than you’d
think; when changing jobs, Totaljobs found that people are just as likely
to start work in a different industry as they are to progress within their own.
The average tenure for UK tech employees is just 1.6 years, so this figure shouldn’t come as a surprise, but salary stagnation is also likely to have increased the rate of movement.
So, there’s a reasonably steady flow of workers both entering and leaving IT, but what about job changes within the sector? Well, it’s unsurprising that in an industry as fast-moving and adapting as IT, the majority of moves happen within the sector - a huge 55% moved internally in 2022. The average tenure for UK tech employees is just 1.6 years, so this figure shouldn’t come as a surprise, but salary stagnation is also likely to have increased the rate of movement. Rising costs and other global factors have left salaries falling far behind inflation country-wide, but tech workers are especially vulnerable - IT was named in the top 5 sectors experiencing salary stagnation. This stunt in pay is likely a contributing factor to the large volume of workers seeking a new role, as a way to increase their pay.
Since so many workers are seeking new opportunities as a way
to advance their career and increase their take-home pay, it’s the perfect time
for employers to fill any outstanding roles or grow their team - especially if
workers are joining the sector from other industries and bringing new skills
with them
Attracting tech talent with Applause IT
If you’re looking to make the most of these industry migrations to expand your team, Applause IT can help. Our specialist consultants’ technical expertise, combined with our use of industry-leading tools, mean we’re perfectly positioned to locate the ideal candidate for you.
We believe in a true recruitment partnership, where we become an extension of your team to find the right technical and cultural fit. Get in touch today to discuss how we can work together to build your perfect team.
You can find the full Totaljobs report on the effects of the
cost of living crisis on employers here.
