Farm wage rate rises at 5%-plus amid recruitment challenge
© Gary Naylor Farmers and landowners face workforce wage rises of 5-10%, alongside difficulty in recruiting and retaining staff.
Richard Levin, a partner at business consultancy Brown & Co, said farmers were typically agreeing to wage increases of 5-8% for the coming year.Â
However, in some cases wage demands were higher still at 10%, with employers having to pay the extra to retain staff in a competitive labour market.Â
See also: Farm estates struggle to hire, despite average 5.4% pay rise
Given inflation, which was confirmed this week to have fallen slightly to 10.7% in the year to the end of November, most salary demands are realistic, but meeting them with input costs close to peaks was proving a struggle for many businesses, Mr Levin said.
Some farms had also been paying one-off bonuses to help staff cope with the cost-of-living crisis. These lump sums have been about 2-5% of a worker’s monthly salary, he said.
Savills food and farming director Andrew Wraith reported that farmer clients of the firm were offering average wage rises of 6%.
However, he said there was huge variation in the rates agreed, depending on the type and location of the farm.Â
Pig businesses have struggled to pay any increase, while some cereal growers have been in a better position to meet wage demands, said Mr Wraith. As well as one-off payments, he reported that some farms had renegotiated pay deals in the middle of the year.Â
Salary agreements are often reached in October each year (when, historically, Agricultural Wages Orders increases took effect).
However, by last spring the outbreak of war in Ukraine had added further impetus to inflation, he said, so that agreements made just a few months earlier were already falling short of the cost-of-living increases.
This led to many farms opting for a mid-term, incremental rise to retain workers.
Estates pay survey
A survey of about 50 estates by agent Knight Frank showed average salary increases of 5.4% during 2022.Â
The firm’s Estate Staff Salaries Survey also emphasised the extent of labour shortages. A higher-than-usual availability of alternative jobs appears to be an important factor behind farming’s recruitment difficulties, said Andrew Shirley, Knight Frank’s head of rural research.
When labour is in short supply, there is an increasing likelihood of recruiting the wrong people, he said, and that has implications for staff retention too, further driving the recruitment cycle.
The survey also found:Â
- 86% of estates were unable to fill roles in arable, livestock, dairy and horticulture
- Recruitment for jobs in diversified enterprises such as weddings and catering was particularly difficult
- Candidates were becoming more selective about roles, with remuneration just part of their criteria.
Wages and salary advice
Advisers said it was important to understand, before agreeing to wage rises, how markets could change. Profits are expected to fall in many sectors next year.Â
At current headline inflation figures it would be easy to agree to a higher wage increase than the business may be able to stand in 12 months’ time, said Mr Wraith.
Once a percentage increase has been agreed, it cannot be undone, he pointed out.
Living costs vary widely regionally and that variation should be reflected in the increase. Try to ascertain what other farms are offering staff in order to retain them.
Agreeing an appropriate pay rise has become more difficult since the abolition of the Agricultural Wages Board (AWB), as most farms no longer have a formal process to set wages.
Brown & Co partner Andrew Fundell said that while wage rises are central to the negotiation, setting out a whole package of benefits, including training and development, will help retain staff.
Managers should consider setting up an annual review to discuss wage rises and the discussions should also look at training objectives and personal development, he suggested.