1. A widely varying outlook on pay
In a week of local elections, pay is a key focus amid ongoing strike action across a number of public services. Reported pay awards vary widely, which is why benchmarking is so important when factoring in the sector and wider market activity to ensure pay levels remain competitive in a volatile market.
April pay reviews remain the most common among initial responders, with around one third of respondents having already set their pay review levels for 2023. To date, 4 in 5 respondents expect pay awards to be driven by external relativities, including inflation.
After years of pay levels tracking inflation, the pressure on pay awards since we started collecting data for our UK Reward Management Survey has never been greater. With UK inflation remaining stubbornly high, employers continue to struggle to offer meaningful pay awards. Median pay expectations currently sit at five per cent, however we are seeing the highest increases since the survey began, with increases of eight per cent plus not uncommon.
2. Identifying how best to support employees through the cost of living crisis
With such pressure placed on pay awards in light of the cost of living crisis, millions across the country are facing soaring bills. Employers are increasingly calling these payments one off, non-consolidated lump sums, to avoid tying them directly to the ongoing cost of living crisis.
The language around the crisis is important internally, as inflation remains high and sustains the pressure on employers to adjust pay accordingly. However, given the traditional fluctuating levels of inflation, combined with more optimistic forecasts for inflation figures towards the end of the year, it is hoped that this might ease pressure on employees and employers alike who are both facing escalating costs. Employers granting one-off payments helps their attempts to balance affordable pay awards with their constrained budgets.
“Two thirds of senior business leaders agree that employers have a responsibility to their employees and supporting them during the cost of living crisis.”
A recent study by the Work Foundation at Lancaster University reveals two thirds of senior business leaders agree that employers have a responsibility to their employees and supporting them during the crisis. The findings of the report ‘Shifting sands: Employer responsibility during the cost of living crisis’ also echo our data so far which tells us that 38 per cent of employers who paid a lump sum to bridge the gap between rising costs and take home pay in 2022. The median amount paid by respondents last year was £750.