With the UK’s Autumn Budget announcing increases to National Insurance contributions, many UK businesses are anticipating rising operational costs.
Concerns include potential impacts on investment, hiring freezes, restrained salary growth, and the risk of jobs moving overseas to markets like the US, where business conditions remain more favourable.
Deel, a global hiring and HR platform, recently published data indicating that UK salaries are falling notably behind those in the US, with disparities particularly pronounced in technical roles. This widening compensation gap could present challenges for UK businesses striving to stay competitive internationally in light of the new economic pressures.
Salary Growth in UK Technical Roles Stagnant
Deel’s analysis of hundreds of thousands of contracts reveals a marked difference between salary growth in the US and UK. Over the past 18 months, technical roles in the US have seen an average salary increase of 15 percent, while UK counterparts have experienced only a 3 percent rise.
Technical roles in particular reflect this trend, with salaries for certain positions in the UK increasing at much lower rates or even declining. For instance, UK software engineers earned an average of $123,000 last year, showing just a 2 percent year-on-year increase. Meanwhile, US software engineers saw their salaries increase by 68 percent, bringing their average to $131,000.
Product managers in the UK experienced a year-on-year decline, with salaries decreasing by 10.9 percent to $116,000, whereas US product managers saw a 23.2 percent rise, now averaging $144,000. The disparity extends to account executives, where UK professionals earn an average of $104,000 following a 5.5 percent decrease, while their US counterparts receive $100,000, reflecting an 11.1 percent increase.
Matt Monette, UK Country Manager at Deel, said, “Deel’s data underlines the significant challenges that UK businesses face in attracting top talent, especially when competing with US firms that can offer more competitive compensation packages.”
Persistent Gender Pay Gap
Amid these salary disparities, the Deel report identifies positive shifts in gender representation within technical roles in the UK, with female representation in such positions showing a noticeable increase. However, the gender pay gap persists across markets, with women in technical roles still earning less than their male counterparts.
In the UK, women in technical roles earn an average of $88,000, compared to $109,000 for men. This trend is consistent in the US, where women earn $128,000 on average in technical roles, in contrast to $150,000 for men.
This new data from Deel underscores the importance of ongoing strategies to improve pay equity and competitiveness in the UK, particularly as businesses prepare to navigate the economic effects of increased National Insurance contributions and seek to retain top talent in a globally competitive landscape.
Monette added, “With the Autumn Budget introducing changes that could further increase the cost of hiring, it’s crucial for UK businesses to give a holistic review to their approach to employee engagement and benefits. We want British businesses to stay competitive, and that includes how they attract and retain top talent against a global landscape.”
