Reward and benefits: reviewing what you’re offering in light of the cost-of-living crisis22.07.22
Employers are currently “scrambling around” trying to ease the pressure with pay rises says Gethin Nadin, chief innovation officer at Benefex, while also being warned by the Bank of England and government against increasing pay. So,if you can’t give pay rises, can you soften the blow in other ways? It’s time to review what you are already offering from a benefits point of view, says Benefex’s Chief Innovation Officer, Gethin Nadin.
“This is a reward and benefits professional’s time to shine,” says Nadin. “I think that reward function has become more important and benefits have become more strategically important to organisational success as a result of the cost of living crisis. We're seeing this re-evaluation of what the employee value proposition is,” he says.
Nadin explains that there needs to be an acknowledgement that people are worse off now, as most employees are essentially experiencing a 4% pay cut because of the economic situation, and that the average pay rise this year is only going to be between 3.5-4%.
“And that’s if you’re lucky,” he says. “That still puts people 7-8% worse off and I think we’re not at the end of this, interest rates will probably tip over to 10%, and most economists are saying there’s a 50/50 chance of a recession.
“We aren’t just talking about money, when you see wage drops of that magnitude, you start to see an impact on living standards. It’s almost like another lockdown for a lot of people because the lower income households are being forced to make big decisions over where they spend their money, how many times a day they eat and whether they can heat their house.”
Nadin points out that giving a pay rise is great, but that even in the most generous of scenarios, giving people 10% pay rises will just level off some of the damage.
“Employers are considering the advice from people like the government of the Bank of England, which is to not give pay rises and it's obviously part of the reason why we are seeing strikes going ahead. We have to look at other ways of helping as well.
“Benefits schemes are a way of investing in the financial wellbeing of your people without having to give rises at this point, but anything that employers can do to make net pay go further they should be doing.
“Even the smallest impact can benefit lower paid employees.”
This is an extract from an article originally published by REBA. You can read the full article here