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More than half of London employers have made use of counteroffers in the past 12 months to try and keep staff as skills shortages persist, according to a new report.
According to the CIPD’s next quarterly Labour Market Outlook, 40% of UK employers have made a salary counteroffer to retain staff over the past year, with 38% within that matching salary offers and 40% beating them.
This is most prevalent in the capital however, as 58% of London-based employers have made counteroffers.
The report, which surveys 2,000 UK employers hiring, pay and redundancy intentions, said the use of counteroffers is projected to increase as recruitment and retention challenges persist.
A quarter of employers who have used them previously expect to offer even more counteroffers in the next 12 months than in the past year, while only 8% expect to offer fewer.
However, the CIPD’s research found that just one in five employers that make counteroffers have a formal policy which explains in which circumstances they can be made.
The organisation has warned that this could result in issues relating to pay gaps, pay fairness across similar roles, and the organisation’s overall approach to reward.
Many working in private sector legal and professional services firms have seen their salaries surge over recent years, amid a battle for talent between the City’s top firms.
London consultants, lawyers, and accountants have experienced dramatic increases in their pay and benefits, as labour shortages and a boom in demand for legal and professional services has seen demand outstrip supply.
Meanwhile, average City bonuses have doubled in cash terms since 2008. In the finance and insurance sector, bonuses are now worth, on average, around £20,000 a year – the highest level on record, according to union organisation TUC.