Driver shortages push distribution firms to improve pay

As a post-Brexit, pandemic-exacerbated shortage of HGV drivers has hit the UK economy this year, employers have rushed to implement strategies to help with recruitment and retention in driver-based roles. Our research on pay and conditions in road transport found that half of the pay awards for drivers were worth 3% or more in the 12 months to October 2021.

The results of our research show that licensed HGV drivers typically earn between £21,715 and £23,334, depending on their level of qualification. Meanwhile the median annual salary for van drivers is £20,130.

Despite the labour shortage among drivers, the median pay award over the last 12 months was lower for drivers than other staff, with drivers’ wages rising by 2.28% at the median compared to 2.35% for other workers. However, when considering mean pay awards, drivers received an average wage increase of 3.75% compared to 2.2% for other staff roles. This is a result of nearly half (47%) of the pay awards given to drivers in our sample being greater than or equal to 3% and, furthermore, 17% of awards sitting at or above 4%.

Our respondents use a variety of different shift patterns and methods for round-the-clock operations in order to maintain steady and reliable supply links, which requires a system of unsocial hour premiums in order to ensure enough workers on each shift. Analysis of our survey results shows that median night shift premiums for HGV drivers sit at 22% of hourly wages for Class 1, which equates to £2.49 per hour, while van drivers receive a 17% premium, equivalent to £1.73 per hour. Weekend premiums are much higher, with a median of 86% for class 1 drivers. Meanwhile, ‘back’ or late shifts are typically paid at 13%.

Our pay level analysis shows that the median hourly wage for Class 1 HGV drivers is £11.89, equivalent to £23,558 in annual salary terms (based on a 38-hour week). The mean pay rate for Class 1 drivers from the survey data is higher at £12.64, which aligns closely with the median hourly pay level for HGV drivers (excluding overtime) produced by the Annual Survey of Hours and Earnings for April 2021, as published by the Office for National Statistics, of £12.45. And the upper quartile (UQ) is higher still, at £14.87. The higher mean and UQ are influenced by rates at the bigger firms in the sample, including Sainsbury’s, John Lewis, and the Co-operative Group.

Due to skill differences, the typical hourly wage for a Class 2 driver is lower, at £11.39, with an annual salary equivalent of £21,715. These figures are 7% lower than median pay for Class 1 drivers. Despite a further skill gap, Class 3 drivers’ typical wage is £11.78 and an equivalent of £23,334 annually, close to that for Class 1 drivers. However this may not be representative of the economy as a whole due to a low sample size, as the survey responses only provided five data points for this category. This was the lowest response rate for any of the roles in the survey, and this, combined with the fact that these five responses come mainly from the higher-paying firms in the survey, has produced this apparent anomaly.

The median wage for van drivers is £10.20, which equates to £20,209 annually. This is 14% lower than median hourly pay for Class 1 drivers. The van drivers’ median is 15% higher than the current National Living Wage (NLW) of £8.91 and 7% higher than the planned NLW for 2022 of £9.50.

Staff recruitment for driving roles is currently challenging across the board, with over 80% of respondents reporting they find the recruitment of drivers difficult with nearly 40% finding this ‘very difficult’. The data also shows that employers are struggling with staff retention to a similar degree, with 70% of employers reporting difficulties in driver retention, and over 15% finding this very difficult.

Almost half (45%) of survey respondents have taken, or are in the process of taking, extra measures in order to boost recruitment and retention. Of these respondents, over half were pursuing pay-related solutions. One leading firm raised basic pay for drivers by £2 an hour. Other measures have taken place outside of annual pay reviews. These include signing-on bonuses of £1,000 at two firms in the survey, enhanced overtime rates and incentive bonuses and retention payments of various sorts at others.

This shows that initiatives to deal with driver recruitment and retention are mainly taking place outside of annual basic pay reviews, but if the issues persist, they could affect 2022 settlements as well.