This is how much your salary should increase each year you work at a company

Metro

6 days ago

Money is an awkward topic, especially in the workplace.
But while we're conditioned not to talk about it for fear of being rude, we're simultaneously encouraged to know our worth and confidently request pay rises.
Unfortunately, many UK workers don't have a universal understanding of what a fair salary is, and are often oblivious to their potential earning range. This means that when demanding said wage increases, employees may not even know how much to ask for.
Plus, with 53% of Brits unaware of what their colleagues make (especially those in higher positions), how is anyone meant to know what they should be earning, anyway?
To set the record straight, Metro spoke to finance specialist Pernia Rogers, founder of Your Finance Travel Buddy, and Nisha Prakash, finance expert and lecturer in Finance Management at the University of East London.
Word of warning: Pernia says that even if you've been at a company for years, loyalty doesn't always lead to bigger pay rises.
Nisha also highlights that salary hikes and promotions depend on the industry. For instance, tech and finance sector jobs offer faster salary growth than public sector roles, which she estimates at around 2% to 4% per year.
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'Some companies offer inflation-adjusted hikes so that employees' standard of living is not impacted by rising costs,' she adds.
'In the UK, salary increases by tenure are not regulated by law but are influenced by industry standards, company policy, and individual performance,' explains Nisha.
Having said that, there are broad industry averages which could help set realistic expectations. According to employment website Indeed, the average annual pay rise for an experienced employee is typically between 3% to 5%.
'Anything above 10% is generally considered a good hike, which is typically linked to promotions or job changes,' Nisha adds.
In terms of your first year in employment, Pernia urges not to expect too much of a bump, as you're likely finding your feet within the company and getting to grips with your role.
'Raises tend to be small and usually reflect inflation or company performance,' she says, recalling that her first pay rise in a graduate scheme was 1.75%.
The following year, Nisha says the hike will 'follow a bell curve based on the years of experience.'
If you're expected to take on more responsibility, you should earn more, but this doesn't always happen, in which case Pernia recommends negotiation – 'especially if new hires are earning more.'
As for the exact numbers, Nisha reveals that freshers are typically given 3% to 10% increases, while employees with two to five years of experience can expect 5% to 20%, depending on the job market and individual performance.
At around three years, Pernia warns you risk being underpaid.
'Companies often give smaller annual increases than what you'd get by changing jobs,' she explains. 'Many people who switch jobs after two or three years see 15% to 25% increases compared to 2% to 5% raises internally. When I moved jobs at 3.5 years, I got a 64% pay rise.'
To gauge if you've been bitten by the so-called 'loyalty penalty', Pernia says: 'With promotions or increased scope, your salary should be 15% to 30% higher than when you started.' If it's not, you might be falling behind the market rate.
Next, benchmark your role externally and negotiate, or prepare to move.
After five years, staying put only makes sense if you're rewarded.
Although Nisha suggests that the increase rate lowers after five years of service – unless you're promoted or your role changes within the company – according to Pernia, you should be at least 30% up from what you started on, especially if you've climbed the ladder.
'If your salary hasn't kept pace with promotions, inflation, or market value, you may be losing out financially,' she says.
However, as we know, it's not a one-size-fits-all box, and what's realistic varies depending on your career.
While her most significant pay rise came when she gained her Chartered Accountant qualification, Pernia stresses that not every career path has jumps like that, so it's important measure against your field and market.
Still, don't be afraid to negotiate for what you deserve or explore alternative roles if you don't feel valued. And remember, 'you're not obliged to accept any offer if it doesn't meet your expectations.'
As above, there's not one clear answer.
Promotion timeline depends on the industry, employer and worker's performance. But for scope, Nisha says a realistic expectation is to move from entry-level to mid-level within one to three years, adding: 'This is the fastest promotion phase, and it is typically tied to meeting timelines and learning core skills.'
For mid-level to senior jumps, the timeline takes around two to five years., and 'the expectations here are performance, leadership traits and subject expertise.'
Next up, the transition to management from a senior level takes three to seven years, with key criteria being networking, visibility and capability to create an impact. To get into a senior management roles (such as director) you're looking at five to over 10 years, progressing based on factors like creating long-term impact and business results.
Again, this metric could vary across industries.
'For instance, promotions are much faster in startups compared to corporates,' Nisha says, adding that the 'general rule of thumb in corporate is that if you haven't been promoted within the first three years of starting work, despite strong performance, it is time to ask, negotiate or move on.'
Just raising the question means management will be forced to provide you with a clear career path or development plan, so it's worth a go.
Nisha says that achieving a promotion requires more than hard work. More Trending
She explains: 'One has to consistently work smart, be visible and align with business needs.
'Hence, it is important to request a roadmap from your manager, including what skills, attitude, behaviour, and achievements are required for the next level.'
To improve your chances she recommends 'making your manager's work easier' – but don't be afraid to blow your own trumpted or 'assume your work speaks for itself'.
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Nisha's final words of wisdom? 'Don't wait forever — if you have been performing at the next level, have the conversation.'
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