Tech companies to pay more to keep their staffs on the payroll
Tech companies will soon have to pay employees based on their productivity levels.
The latest round of changes is expected to help tech companies to keep workers on payroll, but some will find that the cost will be prohibitive.
According to a new report from McKinsey, companies will have to spend $7 billion on payroll over the next five years to keep the workers on the job, up from $3 billion in 2016.
“The impact of the new salary increases is going to be felt disproportionately by lower-income employees,” said Jefferies senior vice president of research, who is also the co-author of the report.
“We expect that this new cost structure will lead to higher turnover rates for some companies, but it is likely that it will not be the main driver of the workforce loss in the coming years.”
The new salary structure will also help to protect the interests of companies that can’t afford to hire more people.
“While there is a clear need for a more effective workforce structure, this wage structure will help to ensure that a company has a reasonable chance of keeping its workers on board and maintaining the value of its assets,” McKinsey analyst Kevin Belshe wrote.
“Companies that choose to maintain employees on the platform and are willing to pay this new structure will be able to do so, and the additional revenue will be spent in a way that provides benefits to employees and employers alike.”
For more on the impact of new tech wage increases, check out this report from The Wall Street Journal.