FY2027 people cost: Italy and Poland

The answer

• FY2026 closed €5.8M (5.7%) over budget, at €107.1M. Headcount ran ahead of plan: volume added €6.3M, the department mix €0.18M, while cheaper joiners saved €0.68M.
• FY2027 costs €111.0M in the base case (+3.6%). More FTE add €2.2M: the year opens with the headcount FY2026 closed on, and Customer Service, Tech and Sales keep growing. Cost per FTE adds €1.7M, where the January pay review (2.5% in Italy, 5.0% in Poland) adds €2.0M and the lower cost per FTE of the June 2026 workforce takes back €0.3M.
• A hiring freeze from October would cut FY2027 to €104.6M (−2.3%), but the year would close with 278 fewer FTE than the base case: a capacity decision, not a finance one.
• Higher attrition barely moves payroll but costs in hiring. With attrition 30% higher (5.3 points), vacancies offset the backfills, while recruitment rises to €1.54M (€0.33M more).
• Starting to close pay gaps in January 2027, before the first pay-transparency reports are due, adds €0.76M to FY2027 and €1.52M in every full year after, loaded with employer costs. The gaps come from pay-transparency-readiness-kit.

01FY2026: where the budget went

Volume: FTE above plan at budget cost per FTE. Mix: departments with higher cost per FTE grew more. Rate: actual against budget cost per FTE, at actual FTE.

The five largest overruns by department:

All 12 departments ran above planned FTE. The largest overruns were in Operations (IT · Milan), Tech (PL · Kraków) and Operations (PL · Kraków), where extra headcount met a high cost per FTE.

02What a fully loaded employee costs

Gross pay is base pay at contracted FTE plus target bonus. In Poland, 79 of 1,362 employees earn above the 2026 cap of 282,600 PLN (€66,388 at 4.2568 PLN per euro), so their pension and disability contributions stop part-way through the year.

03FY2027 under four scenarios

People cost = payroll plus pay-equity remediation; hiring cost is shown apart. Scenario settings: Base – attrition x1.0, replacement 90%, growth x1.0; Hiring freeze – attrition x1.0, replacement 90%, growth x0.0, freeze from month 4; High attrition – attrition x1.3, replacement 90%, growth x1.0; Pay equity first – attrition x1.0, replacement 90%, growth x1.0, remediation from month 7.

FY2026 attrition was 16.9% in Italy and 18.2% in Poland. The forecast backfills 90% of leavers after 2 months, so each extra point of attrition adds about €62k of recruitment cost at the assumed cost per hire.

04Recommendations

1. Set the FY2027 budget at the base case plus pay-equity remediation, €111.7M. The first pay-transparency reports cover 2026 pay and are due in June 2027; gaps that are neither justified nor closed within six months lead to a joint pay assessment.
2. Control headcount by position, month by month. The FY2026 overrun was volume, and actual FTE was already more than 2% above plan by August 2025.
3. Treat a hiring freeze as an operating decision. It saves money only by ending the year 278 FTE short.
4. Price attrition in the budget. Recruitment cost rises with every leaver, even when payroll does not.
5. Replace the illustrative rates with the payroll provider's: other INPS contributions and INAIL, the Polish accident rate, PPK participation, and cost per hire.

05Method and limits

• Two engines, one answer. Every figure is computed in pandas and again by live formulas in the workbook; its Reconciliation sheet checks each pair, and CI recalculates the workbook with LibreOffice.
• Month-end population. FTE and cost are counted on the payroll at each month end, from hire and exit dates.
• Simplifications, stated. Salaries as at 30 June 2026 apply to every month; bonus is paid at target; TFR accrues on base pay; one cap and one exchange rate apply to the whole year; overtime, leave and benefits in kind are not modelled. Full list in docs/method.md.
• Not payroll or tax advice. Rates and caps carry their source and status in docs/verification.md.