Salaries are on the rise. Here’s why…

Article

Feb 14

The tech industry is the place to be for job seekers: base salaries have risen 10% to 50% across the digital scaleup sector in London.

Company rebuilds post-pandemic have led to a big surge in HR, Digital Marketing, and Software Sales roles (experienced candidates now have five to ten interviews going on at the same time). These functions were cut the hardest in 2020, so in many ways this surge is just rehiring, albeit at a higher salary.

More people are changing jobs, with the pandemic sparking a career-rethink for many. The Bank of England reports that job changes (across all industry sectors) achieved annual earnings growth of 9% in 2021.

All of this is why we’ve just updated Santa Monica Talent’s free Salary Calculator which shows you the market’s low, medium, and high salary ranges for senior roles.

Eight reasons why salaries have increased

VC money fuels demand, with less supply available

UK tech scale-ups raised a huge amount of money last year (Blossom Capital reports that VC investment across Europe grew to $113bn in 2021). This led to a surge in hiring across the country, with digital-related jobs now making up 13% of all UK job vacancies.

The problem is that there are only so many people to go around, with a recent Bloomberg survey showing employers are now paying more to attract employees.

On top of this, several UK candidates are now working remotely for VC-backed EU-based companies.

Fintech aggressively on the hunt

Last year, UK fintech investment hit £27.5bn (a seven-fold increase in just 12 months). These fintech scale-ups have the highest budgets and so pay the best salaries. It means they can cherry-pick the best talent from other sectors, leading to a brain-drain of sorts within the London tech landscape.

Brexit hangover

Brexit has added new hurdles for those wishing to work in the UK and so cut the flow of workers from abroad.

The Great Resignation

A recent Deutsche Bank report found that people are resigning at the highest rate since 2009. The pandemic has led to many people leaving their industry.

This could be because they wanted a new challenge, their job was hit hard by Covid restrictions, or they are unable to work due to health reasons. Lots of candidates have also started new freelance ventures.

Interviewing is so easy

Zoom has made it far easier to interview for roles, making it simple for candidates to look around for new jobs. They no longer have to take a half-day off to attend an interview and can even organise two or three Zoom interviews in a day.

Starting salaries have increased

KPMG reported that starting salaries were rising at the third fastest rate since 1997. This rise is due to scarcity in entry-level degree-qualified candidates.

10-year salary stagnation

This salary rise has been coming for 10 years. When you compare London against New York, San Francisco, or Singapore, London salaries have always looked low. Perhaps this past year is just redressing this.

Companies have had to increase their salaries to compete (both with UK scale-ups and large US tech firms now hiring local talent rather than bringing someone over from the States).

Over 50s Burnout

Official figures last week showed that since the start of the pandemic in 2020, nearly a quarter of a million Britons aged 50 to 65 have left paid work altogether and are not seeking new jobs. Plus an unusually large number of older workers have retired early, with the result that about a million (mature) workers are missing from the labour market, according to Tony Wilson of the Institute for Employment Studies.

Summary

At Santa Monica Talent, we believe these salary increases will continue for another year before they consolidate. When they do, companies will turn their attention to increasing productivity and retention. Attracting the best talent isn’t just about who pays the highest. There are other methods and strategies you can implement. To hear about them, email us for a free and confidential chat: ell@santamonica.digitial.

Check out our updated Salary Calculator here.