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Human Resources

IT salaries: Employees hold the power in UK job market

This is a contributed piece by James Milligan, Director of Hays Information Technology

 

There’s no doubt that 2015 was a bumper year for the IT industry in the UK. Salaries are up, confidence is booming and it appears as though 2016 will be even more successful as organisations adapt and invest in their IT systems to keep pace with growth. Yet there are warning signs that the sector could experience a very troubling 12 months ahead, as an increasingly fluid jobs market, discontent around pay and the ever-present skills crisis threaten the growth ambitions for many IT companies.  

If you work in IT in the UK, it’s likely that you received a pay increase last year, and it may have been a substantial raise at that. According to Hays’ own UK Salary & Recruiting Trends 2016 [gated] report, the average IT salary increased by 2.8% over the year, higher than the national average increase of 2.3%. It may appear a small difference, but it means that our IT professionals enjoyed some of the biggest pay increases in the country – only the construction sector fared better. It’s also worth bearing in mind that this masks double digit growth in some specific positions, and those working in cloud, project and change management roles would have ended the year on a particularly happy note.

Employers also have reasons for optimism. Almost three quarters (72%) of IT employers expect business activity to increase over 2016 and a similar number (76%) intend to recruit more staff to meet the demand. Confidence is high – which could be a double-edged sword, as it hasn’t gone unnoticed by employees.  

Power in the jobs market is shifting away from employers and towards candidates. Employees recognise that there are an increasing number of interesting and well-paid IT contracting jobs currently on offer and many are confident that they can secure a better position elsewhere. An alarming three in five (63%) IT employees expect to change jobs in 2016, with pay cited as the top reason for movement. Worryingly, a similar number of employees said they’re not satisfied with their career prospects at their current job.

This mass exodus should be extremely concerning for the entire sector, and particularly for those expecting a more active 2016. How are you meant to increase headcount and meet the demands of a busier year when you can’t even retain your existing staff?

The situation becomes even more troubling when you take into account the industry’s chronic skills shortage. A third of employers say they don’t currently have the talent required to achieve their business objectives, and four in five (83%) are concerned they’ll encounter a shortage of suitable applicants throughout the hiring process. A more fluid jobs market will only increase the value of IT’s top talent and employers will need to act quickly to ensure that they’re in the race for the most skilled candidates.

Pay will naturally play a large part in securing top candidates and it appears that employers will need to dig deeper into their pockets to retain and attract the best talent. We saw high pay increases in 2015 and I expect 2016 to follow a similar pattern as pressure builds on employers to offer substantial salary packages. Those businesses that can’t complete with higher salaries will need to communicate better with employees around career progression opportunities open to them and find other ways to attract the best people.

After years of uncertainty, candidates will be glad to wield more influence in the jobs market and many IT professionals can look forward to a potentially lucrative year ahead. Yet for employers, the next 12 months could be turbulent. On paper, fewer employers intend to increase pay this year than in 2015, but I expect in reality many will adapt throughout the year as skills and top talent become increasingly more difficult to find and keep. Those businesses who don’t realign their plans to meet this reality may risk getting left behind.

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