What lengths will people go to find a new job in 2020? For those who have lost their job as a result of Covid-19 restrictions, it has largely been a very tough market. For those working in badly affected sectors such as hospitality or events, the best option has often been a new career path, even if it means a step downwards. Sadly, it has also meant, for many, a drop in salary.
How many find themselves in this situation? You can get a feel for the scale of the issue from LinkedIn, which has been publishing a bi-monthly Workforce Confidence Index. Unsurprisingly, it has been revealing big drops in confidence levels ever since Covid arrived on these shores.
The latest Index, published on 3rd November 2020, revealed the startling statistic that more than a third (38%) of job seekers would take a sizeable pay cut in order to land a new role. Does this really mean that job seekers should now expect a lower salary?
Money’s too tight to mention
It isn’t only job seekers who have lowered wage expectations. The BBC reported that nearly a fifth of UK businesses have asked staff to take a pay cut to help stave off redundancies, citing a survey by the Chartered Institute of Personnel and Development (CIPD).
The CIPD surveyed 2,000 firms in June and found that a further third of companies were considering freezing workers' pay or delaying increases. And almost a quarter were asking staff to work - and be paid for - fewer hours.
It has been a shock for large numbers of employees to discover how limited their employment rights were. An employer can ask an employee to take a cut in pay or hours if they can demonstrate there is a reduced need for the role, or that redundancies would otherwise be required. With the Covid slowdown, it has been virtually impossible to argue that a business is not faced with a choice between pay cuts or redundancies.
For those entering the job market for the first time, starting a career has been a daunting prospect. According to Business Matters, the outlook was the bleakest ever for the hundreds of thousands of students who finished university this summer. Research showed that average graduate salaries slipped by 3.3 per cent from £24,000 last year to £23,200.
Students who graduate in a recession are 20 per cent less likely to be in work after a year than if they had entered the workforce during more normal times. Those who are lucky enough to find a job will be earning 7 per cent less after a year than they would have done.
A confused landscape
While many have endured the shock of redundancy, pay cuts or a debilitating absence of job security, this is not the whole story. While most sectors have faced difficulties, a gaping chasm has opened between those sectors who have experienced a collapse in their ability to function and those who have been mildly affected.
The gap in fortunes is illustrated by the findings of the Office of National Statistics, which reported that growth in average total pay (including bonuses) among employees for the three months June to August 2020 was unchanged from a year ago, while regular pay (excluding bonuses) growth was positive at 0.8%.
Once inflation is taken into account, this does represent a slowing in salaries, but hardly the armageddon that one might expect. However, once you focus on the most-impacted sectors, the divide is striking. Unemployment and lower wages have hit hospitality, travel, tourism and leisure sectors particularly hard, with many businesses closing or on the edge of collapse.
One of the sectors which has escaped the most biting cuts has been the taxation industry. Across the globe, governments have introduced tax measures designed to mitigate the short-term pain of lockdowns and movement restrictions. These initiatives need to be implemented and monitored, and this is where tax professionals come in.
COVID measures are, indeed, keeping tax professionals across the board very busy for the foreseeable. And when the work is mounting, there’s very little that can justify salary decreases across the tax sector. And when we pair the COVID related work with the ever-growing demand for tax professionals to tackle impending Brexit issues, digitalisation, legislation changes (the list goes on…), then there’s a strong case that salaries will continue to increase for Europe’s tax specialists.
This year, Harvey John’s indirect tax & tax technology team conducted a comprehensive review of global salaries. If you’d like to receive a copy of this analysis, please email me.
Alex Mann is Associate Director, Indirect Tax & Tax Technology at Harvey John
For expert advice on how to get the best out of your tax career, whether in a professional services firm or in-house, contact us today.