Financial wellbeing of employees
The strain of external market conditions on employees and the cost of living crisis is being well documented. People Management reports that older workers are returning to the labour market as a direct result of the increased cost of living. While this will enrich organisations who can benefit from their wealth of experience and can alleviate the pressure of the skills and talent shortage that many employers are tackling, this highlights the real challenges people are facing when it comes to balancing their finances.
“75 per cent of employers reported that there are no plans to have a second pay review in 2022."
Most organisations do not plan on paying a lump sum to address the increased cost of living, with 62 per cent having no plans; however, 24 per cent are considering it. Out of the 14 per cent who have paid, or plan to pay, a lump sum to recognise the increased cost of living, the most common amount is £500. Two thirds of the employers paying that lump sum payment will do this instead of considering a second pay review. Around one third were offering this across the board, but the majority of respondents had tailored this to lower paid workers or certain roles.
A second pay review for 2022?
With nearly three-quarters of employees saying that their employer has not adequately kept up their pay with the cost of inflation, this is consistent with our pulse survey results, where 75 per cent of employers reported that there are no plans to have a second pay review in 2022. Although in the minority, a notable 16 per cent said that they are considering it and seven per cent do plan to carry out a second review. Two per cent are bringing forward the 2023 pay review to bridge the gap between their last pay review cycle and the market pressures that have made such an impact in the interim.
Where organisations are paying a second pay review in 2022, the most common budget is two per cent. For a small minority (in sectors such as Renewables, Construction and Electricity), the budget is between four and six per cent. For all second pay awards, the earlier 2022 pay awards were comparable, but not lower, than the additional awards. While 24 per cent individually-determine their increases, the most popular approach is an across the board increase for 36 per cent of organisations. This also reflects the collective impact on all employees facing rising costs.