The cost of living crisis is driving resignations over pay

Across both the UK and the US, rates of resigning have spiked exponentially in a trend that has been dubbed the ‘Great Resignation’.

The ‘Great Resignation’ is seeing employees begin to reassert themselves, using quitting as a means of seeking out new positions. This is forcing employers to rethink and find ways to encourage employees to stick around. 

While there are many routes that employers can take, Lattice’s survey of more than 3,000 US and European workers found that pay is an important factor in talent attraction and retention. 

The study found that 52% of UK workers would leave a job for a salary rise alone – 22% said they would look for other factors, and 26% would change jobs for the same salary.

The figure was 49% in the US – with 36% saying they would move for other reasons and 15% open to a lateral move. 

Inside employees’ salary demands

While it is useful for employers to know that wages are a leading cause of the ‘Great Resignation’, Lattice’s study digs into what types of compensation changes employees are looking for. 

Vague compensation increases are not sufficient for many employees when they are deciding on a new job, the Lattice survey shows. 

In fact, many workers have specific increases in mind. According to Lattice, around 29% of  UK  respondents said that they want to be evaluated for pay increases every three to six months, in recognition of good performance. 

These stats are not isolated to the UK. Lattice shows that in the US, 40% of younger workers (ages 25-34) also desire compensation increases more often throughout the year. Across the entire US population surveyed, over 30% of employees said they expect a raise every three to six months. 

Lattice’s survey results show that pay transparency is also high on workers’ priority lists. 67% of US employees and 64% of UK workers want more transparency from their companies about pay practices. 

Employees are fed up of employers being hush hush about pay rises across the organization – they want to know that their work is valued, and they want employers to recognize them with financial rewards.

Impact of the cost-of-living crisis

Inflation rates have spiked worldwide. These price increases have impacted every element of employees’ lives. In the US, inflation has risen to 8.6% while the UK inflation rate has already hit 9% and is predicted to rise to 11% later this year. 

Lattice’s study found that the cost of living crisis is playing into employees’ desire to quit their jobs for higher pay. Remember, the global workforce is facing not only the ‘Great Resignation’, but also rising inflation, volatile markets, and an ever-increasing cost of living. 

Employees are voting with their actions and corporations should be cognizant that work performance (65%), cost of living changes (53%) and specialized skills (45%) were ranked as top factors employees want employers to consider when increasing their pay, according to Lattice. 

In fact, over half (53%) of UK respondents said that the cost of living should be one of the most important factors in compensation reviews, as the cost of living has continued to rise.

In the US, the numbers are the same, with 53% of total workers viewing cost of living as one of the most important pieces of compensation rates.

Currently just 26% of UK and 27% of US employers are basing pay rises on cost-of-living changes.

“This report reveals how employee perceptions around compensation are evolving in the midst of all this upheaval – and provides important insights for leaders who will be tasked with balancing employee expectations alongside shifting business needs,” said Dave Carhart, vice-president of Lattice’s advisory services.