Only one-third of British firms plan above inflation pay rises

  • Pay & Benefits
pay inflation
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Peninsula Team, Peninsula Team

(Last updated )

Data from a recent poll of more than 1000 businesses, commissioned by the Work Foundation at Lancaster University, suggests that pressures facing UK firms have eased slightly over the last 15 months but that this is not being reflected in additional support for workers.

“Shifting Priorities? Employer Responsibility in the Third Year of the Cost of Living Crisis” argues that workers are continuing to come to terms with higher costs that have outpaced pay increases.

In this context, the report suggests, what it means to be a responsible and supportive employer is changing.

Professor Jan Bebbington, Director of the Pentland Centre for Sustainability in Business at Lancaster University, said: “These findings raise concerns in the context of the Sustainable Development Goals (SDGs) — which should be acting as a north star for businesses. The Goals highlight the importance of poverty reduction, improving health and wellbeing and increasing access to an income that can support people’s needs.”

Responsible businesses are — and more should be — proactively seeking opportunities to support the financial wellbeing of their workforce now and into the future, she went on.

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, the report highlights.

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.

It urges senior leaders to prioritise at or above inflation pay increases, especially for lower earners, and calls on them to review employment contracts to prioritise job security.

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