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Four in 10 make counter-offers as skills shortages bite | Jo Faragher

Four in 10 employers are having to resort to counter-offers in a bid to retain key staff, according to the CIPD.

The HR body found that London was the “counter-offer capital” of the UK, with 58% of employers feeling compelled to match salaries or go higher than a competitor in the last 12 months in order to retain an employee.

The CIPD revealed the figures as part of its quarterly Labour Market Outlook survey of 2,000 employers. On average, those polled felt that pay increases would remain at 5% for the next 12 months, unchanged from the last two quarters.

A quarter of employers that have used counter-offers previously expected to offer even more in the coming year as recruitment and retention challenges continue. More than half (51%) had increased the number of counter-offers in the last year.

Just 22% of employers who make counter-offers have a formal policy on this, however, and almost a third (29%) think they are ineffective. Forty-five percent thought they were useful for retaining employees for another 12 months.

A high proportion of employers reported hard-to-fill vacancies – 44% in the private sector, rising to 50% in the public sector.

The CIPD warned that not having a formal policy or approach on counter-offers could threaten a transparent and fair pay and reward strategy. For some employers, they may only be valuable as a short-term option as – if retention issues are not addressed – employees may still move on if expectations are not met.

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