Tables are turning on worker’s pay expectations amid Labour’s tax hike on employers – London Business News | Londonlovesbusiness.com

After a year of pay exceeding inflation, the tables seem to be turning on worker pay expectations as employers take stock of regulation and tax hikes.

That’s according to the latest data from international recruitment expert, Robert Half.

Data from the firm’s latest Jobs Confidence Index (JCI) – an economic confidence tracker produced in partnership with the Centre for Economics and Business Research (Cebr) – revealed that 63% of workers are confident in their job security for the next six months.

However, a slowdown in real wage growth and an eight-point drop in the pay confidence pillar of the Index indicates that the tide is turning for workers – with the power shifting back to employers.

Additional statistics from Robert Half further indicate a reversal in remuneration growth potential. According to its 2025 Salary Guide, 70% of workers are finding it more challenging to negotiate a pay rise compared to last year.

Employees do, however, feel they deserve an increase, whether that’s due to the growing costs of living (39%), because they expect it every year (29%) or due to exceeding performance goals (25%)

Employers are seemingly less willing to further add to employment costs, focusing instead on improving productivity. Data from the firm’s 2025 Salary Guide revealed that 44% of businesses are planning to implement automation and digital transformation to enhance productivity, while 40% are optimising workflow management.

According to Robert Half, with increases to National Insurance Contributions (NICs) also adding to financial pressures, it is less likely workers will get the pay rise they want in the New Year.

Matt Weston, Senior Managing Director UK & Ireland, at Robert Half said, “Workers have seen high wage growth in response to the cost-of-living crisis, which has led to a level of expectation among employees of continued pay rises.

“The reality, though, is that many firms simply can’t sustain this, particularly with NICs set to increase.

“Given that the UK’s productivity levels have remained stubbornly low, we are seeing a growing number of companies looking at ways to streamline current operations and better utilise resources.

“This is likely to continue until the economic climate settles from the recent upheaval we’ve experienced. However, that’s not to say that workers will lose out overall.

“The proposals in the Employment Rights Bill and a general recognition within the business community that advanced perks and benefits are a must in the modern world, mean that employees will reap the rewards beyond their pay packets.”