HR sees long-term fall in real wages
Average HR salaries have fallen in the wake of widespread adoption of the Ulrich model, according to an analysis of ONS data carried out by Randstad In-House Services.
Randstad’s research found that, between 2002 and 2014, the average annual salary of a full time HR professional dropped, in real terms, by 18% to £31,377 in 2014.
The company says the pay squeeze does not appear to have been linked to the economic environment. In the pre-recession period of 2002-06, the average salary of a full-time HR professional fell 5.9%. During the recession, and in its aftermath, the sector’s average pay packet fell by 7.2%. A further 7.8% fall was recorded post-recession, during the 2011 and 2014 period.
According to Randstad, the sector has fared badly compared to other private sector professions. The accounting profession, for example, only saw a 3.7% dip in its employees’ average pay during the 2011-14 period – 4.1% less than the pay contraction undergone by HR workers during the same time-frame. Similarly, the average salary of a retail professional declined by 0.4% between 2007 and 2010 – 6.8% less than the pay cut the human resource sector endured over the same period. Only the construction trade and the management consulting profession absorbed a higher proportion of pay cuts between 2007 and 2014.
Sally Cleary, managing director of Randstad In-House services, said, “Despite the valuable work they do, HR professionals have seen their average pay fall, in real terms, like a stone since 2002. Gone are the days of highly paid HR all-rounders. Thanks to the wide adoption of the Ulrich model, they have been replaced by less experienced, and less well-paid, HR executives who are masters at performing their own siloed function. The result is a more effective HR machine staffed with people earning less than their all-rounder predecessors.”
Randstad has also found that in the years following the recession period, austerity has started to impact the real-terms wages of many public sector professions, cutting back on some of the pay increases they initially gained, which their private sector peers did not. Nurses, for example, saw the 3.2% real-terms wage increase they enjoyed over the 2007-10 period wiped out by a subsequent wage cut of 6.9% between 2011-14. Similarly, teachers, who benefitted from a 2.3% wage rise during 2002-6, were clobbered with a 6.9% real-terms pay cut over the 2011-2014 period.
Despite the real term falls in HR salaries, Randstad’s research found the sector’s combined wage bill was now rising.
Randstad ranked each occupation by the change in the aggregate wage bill for full-time staff between 2002 and 2014, adjusting for the effects of inflation, taking account of both the resilience of employment levels and real wages to provide a rounded view of how recession-proof each occupation is.
The analysis found that the aggregate salary of all full time HR professionals fell by 1% between the pre-recession period of 2002-06 and declined a further 14.8% during the worst of the recession (2007-10). However, between 2011 and 2014, the years which marked the beginning of the recovery from the recession, the profession’s total pay rose by 9.7%. By contrast, other sectors with high private sector dominance were continuing to see steep contractions in aggregate pay during the 2011-14 period. For example, the travel agency profession saw its total pay drop by 21.8% between 2011 and 2014, while the aggregate pay of the electrical trade declined by almost a quarter (24.3%).
Cleary added, “The massive increase in the industry’s aggregate pay since 2011 has been driven by an explosion in the volume of HR jobs. As the Ulrich model has become adopted so widely, the profession has become more specialised and department-specific while the number of roles in the sector has proliferated. More candidates are now required to fill these roles and the HR profession could, ironically, find itself facing a skills shortage of its own if it doesn’t do more to improve and advertise the benefits of working in the sector.”
Although the total number of people in work in the UK rose by 1.4m, the country’s aggregate pay bill for full-time staff fell in real terms by 3% from £653.8bn in 2002 to £634.1bn in 2014. Across the UK economy, real-terms wages declined by 8%, falling from £36,200 to £33,500 between 2002 and 2014, as the wages rises of 4% in the 2002-6 period were more than reversed.
While the human resource profession has been one of the worst-hit professions between 2002 and 2014 when it comes to pay squeezes, other areas dominated by the private sector have also experienced severe salary restraint when compared to many typically state sector professions.
Over a twelve-year period, the management consulting profession has seen its average salary fall by almost half (43.1%) – diving from £83,355 in 2002 to £47,424 in 2014. Similarly, the average pay of a construction worker has plunged by more than a third (37.8%), falling from £42,560 to £26,492 over the same period. By contrast, professions typically associated with the public sector have experienced far less pay restraint. The average salary of a social worker fell by only 4.4% over the 2002-14 period, while the typical pay of a nurse has only seen a 5.4% dip over the same time-frame. Moreover, the average salary of the transport profession – one which includes London bus and tube drivers – has grown by 43.8%, increasing from £53,048 in 2002 to £76,281 in 2014.
Cleary said, “A good HR department is vital to any organisation – it’s the oil that keeps the engine running smoothly. While management may be reluctant to pay HR professionals more, it’s clear that the explosion in the number of roles is going to disturb the balance of supply and demand.”