This is how inflation affected the labor market

How much salary increase is justified? – this is also an important question

The increasing cost of living encourages employees to be active in the labor market: in order to get a better salary, the situation can motivate many to look for a new job for a higher salary. Until now, the most motivating factor for switching has been salary, the importance of which has increased even more now. Therefore, finding and recruiting new employees effectively can still be an important success factor for companies, and in comparison, due to the decreasing intensity of recruitment, the retention of their current employees increases in value. Meanwhile, they have to make short and often even long-term decisions in an uncertain economic environment.

In most cases, due to the cost of living due to inflation, companies increased the salaries and benefits of their employees. One of the most important strategic questions in this case is the optimal amount and form of this: should employers give their employees a one-time or permanent amount. Wage increases must definitely be included in the company’s budget, which is often compensated by raising prices. In this case, the most important question becomes how much the market can withstand a price increase and whether the consumer will tolerate the resulting price increase when paying for products and services.