AMSTERDAM, July 27, 2022 — Dutch employers are planning to increase their budgets for pay rises by 3.8% in 2023 as they struggle with a challenging labour market and staff expectations around inflation, according to research by WTW, a leading global advisory, broking, and solutions company. In the Netherlands, 532 companies participated in the annual salary survey.
WTW’s latest Salary Budget Planning Report found the pay increase is higher than the 3.5% average pay rise in 2022.
Dutch businesses are under pressure to do more on pay. Four out of ten (38%) businesses found their pay budget is now higher than they projected. And 34% also say they have or will increase how often they review salaries. Among those, 94% started or are planning to review pay twice a year.
There were three key reasons for the bigger pay budgets: 62% of employers cited concerns over a tighter labour market, 55% reported fears about inflation, and 40% said their employees had expectations and concerns they needed to meet.
Monique Driessen, Consultant, WTW Netherlands, said: “While salary increases are currently being outpaced by inflation rates, employers are looking for other ways to retain employees, such as a focus on wellbeing. In today's dynamic environment, it is imperative that organizations have a clear compensation strategy and an understanding of their own competitive position in terms of compensation."
“In today's dynamic environment, it is imperative that organizations have a clear compensation strategy and an understanding of their own competitive position in terms of compensation.”
Monique Driessen | Consultant WTW Netherlands
As the ‘Great Resignation’ continues, attracting and retaining talent have become a big headache for employers. The proportion of Dutch firms reporting difficulties in attracting talent has risen from 31% in 2020 to 93% this year, while those with issues retaining existing staff have soared from 18% to 89% over the same time.
IT and engineering skills are especially sought after. 77% of firms said they have problems filling IT roles, and 72% had issues keeping their existing IT staff. For engineering roles, 58% struggled to recruit, and 52% had problems retaining staff.
To improve their attractiveness to new staff, 67% of employers have increased workplace flexibility; 58% said they have put more emphasis on diversity and inclusion; and 46% now offer financial incentives like starting bonuses.
67% of employers have increased workplace flexibility to improve their attractiveness to new staff
Likewise, organisations are trying to retain more of their talent through broadening their focus on diversity and inclusion (56%); increasing remote working options (47%); and changing pay structures like base salary and bonuses (38%).
Driessen added: “The tough labour market, especially for employees with high-demand skills, means that organizations need to be much more creative in attracting and retaining staff. There is a lot of competition when it comes to bringing in scarce talent, like digital or IT. It’s not just about pay, but also about providing opportunities for development and progression. A well thought through strategy for career and talent development is key to getting the right people in the door. The issues surrounding inflation and labor market tightness will continue to be present in the coming year."
The Salary Budget Planning Report is an authoritative global study about salary budgets and recruitment compiled by WTW’s Reward Data Intelligence practice. The survey was conducted in April and May 2022. Approximately 22,570 sets of responses were received from companies across 168 countries worldwide. In the Netherlands, 532 organizations responded.
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