More than 60% of senior business leaders believe British employers have a ‘substantial responsibility’ to help their employees with the cost of living but only 30% plan to award pay rises above inflation this year, a new survey reveals.
Data from a recent poll of more than 1,000 businesses, commissioned by the Work Foundation at Lancaster University, suggests pressures facing UK firms have eased slightly over the last 15 months, but this isn’t being translated into additional support for workers.
A new Work Foundation report, published today, suggests 38% of employers have introduced new support financial wellbeing measures since the start of 2023 such as pay rises, and which could include extending benefits packages, offering overtime or offering one-off cost of living payments. However, 34% of employers say they were unable to provide financial wellbeing support in 2023.
With interest rates at their highest level for 16-years and the Office for Budget Responsibility (OBR) predicting that real wages will not return to 2008 levels until 2026, the Work Foundation warns that many low-paid workers continue to struggle to make ends meet with sustained higher prices and rising housing costs.
The think-tank is calling on organisations to invest in targeted financial wellbeing measures for their most vulnerable staff members – including above inflation pay rises.
Ben Harrison, Director of the Work Foundation at Lancaster University, said: “Inflation may be coming down but it’s wrong to think the cost-of-living crisis is over – the truth is it has evolved.
“Interest rates are at a 16-year high, inflation is still above target and there are groups of people who have been suffering more than most with the acute effects of financial hardship. A third of businesses were unable to any support their staff in 2023, and that will hit the lowest paid workers most.
“In a world where wages are worth less, it is vital that employers continue to support workers with long-term financial wellbeing support and focus on providing pay rises which match or exceed inflation wherever possible.”
The Work Foundation and the Pentland Centre for Sustainability in Business at Lancaster University commissioned YouGov to poll 1,052 senior business leaders in March 2024. Respondents were asked about their experiences of worker shortages, the cost of living and their approaches to financial wellbeing. This follows a YouGov survey of 1,009 senior business leaders that was completed in December 2022.
Responses suggest rising costs and worker shortages are still impacting businesses, but pressure on firms is easing
Over a third of senior business leaders (35%) said their production costs have increased, compared to 41% in December 2022. Nearly half of employers (46%) reported no issues with recruiting or retaining staff, up by 16% on the year.
Larger organisations (250+ employees) are much more likely to face staffing issues than SMEs – 47% report they struggle to recruit (vs 35%) and 38% are struggling to retain workers (vs 16%).
Despite these slight improvements, over a third of senior business leaders (36%) state their organisations are finding it harder to implement pay rises above inflation since the start of the cost of living crisis. The number of businesses that say they have considered redundancies this year (18%) remains roughly the same as in 2022.
“Our data suggests there continues to be a gap between what senior leaders think and feel, and the actions they take,” Harrison continues. “Two thirds of employers still agree they have a major responsibility to support their staff through the cost of living crisis, yet only 38% have introduced new financial wellbeing support over the last year.
“As Government support is also due to recede, the pressure on low paid workers could increase significantly this year.”
