As we approach annual review season, over half (53%) of UK employers say their wage costs have shot up in the last 12 months. That’s according to new research*.
Furthermore, with nearly half (44%) citing upward pressure on wages as their most urgent payroll challenge, the research indicates pay pressure remains rife across UK businesses. That’s despite ONS data showing total UK wage growth fell to 4.9% in the three months to August.
Meanwhile, employer confidence in communicating about money has also taken a knock with businesses reporting challenges promoting financial wellbeing (32%) and managing pay transparency across their organisations (42%). Amidst a bumper year in payroll which has brought significant shifts in National Minimum Wage in both the current and former parliaments, the findings indicate the ongoing impact of the cost-of-living crisis on workers and businesses alike.
Shared financial pressure
The growing pressure on payroll costs underscores a larger issue: while businesses face increased financial strain to attract and retain talent, employees are facing their own cost-of-living realities.
Research, announced in September by SD Worx highlights what’s in the pay packet is the number one driver of dissatisfaction amongst employees. It showed that less than half of the workforce (47%) is satisfied with pay, while only 49% feel that their salary is competitive in the labour market and just 52% feel they are paid fairly compared with colleagues working at a similar level.
Overall, despite being united in citing financial pressures as their biggest concern, a serious disconnect remains between what workers need to shoulder living costs and what pay, and benefits packages employers can realistically deliver.
The communications gap
Gaps in effective communications around pay packages is leading to dissatisfaction, and a lack of engagement in the workforce. While some employers are tackling the issue through one-on-one conversations (32%) or through official internal communications (22%), these efforts can have limited reach and run the risk of leaving a sizeable portion of employees out of the loop. As a result, employees feel underwhelmed with just 50% saying they receive sufficient communication about their pay and only 25% saying they have the autonomy to personalise their rewards packages to individual interests and needs.
However, it seems that businesses are actively investing in better communications with employees to tackle the problem and build wider understanding of the value of pay and rewards packages. Two thirds (65.7%) of businesses are investing more time and budget to their rewards communications at least in the short term, while 38% of that figure intend to make it an investment priority in the long term.
Commenting on the findings Laura Miller, UK People Country Leader at SD Worx said:
“The research highlights the very real impact that financial strain is having on businesses. However, the strain is shared by employees who too often feel poorly informed, ignored or just not in control of their own pay and benefits package. However, it’s a positive sign that employers have read these signals and are making active inroads to improving their communications about pay. This is vital to take a more transparent, empathetic approach that is able to reach across an entire company. However, it should be stressed that these efforts must be strategic, personalised to individuals as far as possible and above all else consistent.
A good mix of financial and non-financial benefits really helps boost employee satisfaction and well-being. However, even the best perks mean nothing if employees feel in the dark about their value or feel that they’re not in tune with their interests or career goals. That’s why employers must align benefits with what employees find important and give them a voice in the decision-making process. This ultimately builds trust, understanding and an appetite to stay with the company in the long-term.”
*Research SD Worx
