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The Salary squeeze

Inflation in the UK has reached a 30-year high and now money is on the minds of employers and employees alike.

Following Totaljobs' research, many experts expect it to rise further with projections of a peak of 7.25%, and with inflation rising faster than salaries, employees are feeling the squeeze.

Although the National Living Wage will also rise this year, many people remain concerned about the situation.

Generally, on a list of factors that are most important to people in a career, 59% of UK workers report that a pay rise in line with inflation is one of the most important factors in their job.

Following in order: flexible working hours (49%) and generous annual leave (38%), Hybrid (31%) of workers (this is one of their top factors for job satisfaction) and clear progression opportunities (27%).

What is the worker's situation?

Many people in the UK don’t have savings to dip into in the first place and almost half of the working population (47%) have limited disposable income, going as far as describing themselves as living “payslip to payslip”.

Over a third (36%) of UK workers say their current salary doesn’t enable them to have a good quality of life.

Almost a third (30%) of UK workers who are currently on a part-time contract are looking to move into full-time work to earn more money, while the same amount has already taken on extra shifts at work.

It’s no surprise, then, that over a quarter (28%) find themselves spending less time with their families because of it and leading many to look elsewhere for work.

Many businesses will be conscious of where a high cost of living leaves their staff.

Even though the majority of employers are rising to the challenge, 16% of businesses are not taking any measures to help staff with the rising cost of living.

This could have a knock-on effect on staff morale and engagement in the long run.

If financial factors are causing stress, employees are more likely to be disengaged with their work and could see their mental health suffer.

What can employers do?

Salary often tops the list of needs for employees, some workers point to a one-time bonus as an alternative measure if not already available. Alongside this, with the ONS reporting a continued rise in working hours, 36% of people want to be paid overtime and say this will offer them greater financial security.

While setting a competitive compensation package should be a given, fair and equitable compensation structures can only be created if HR teams are able to take the time to review the compensation of all their staff - not just new joiners. Businesses should look to analyse and evaluate their internal job structures using a robust evaluation methodology, with an output to ensure the level of responsibility and the impact.

This situation makes employees feel overwhelmed, so a quarter (24%) of businesses are providing financial well-being advice to their staff.

This might be seminars or webinars or creating an online hub full of impartial advice that employees can turn to as they wish.

In conclusion, living costs will continue to rise in the months ahead, which could drive more people to search for work in industries that can offer higher salaries.

For employers, this means striking the balance between attraction and recruitment strategies while investing in existing staff, not only through yearly salary reviews but through training and equitable compensation packages that go beyond take-home pay.

To start, open dialogue, equitable salaries, flexibility, and understanding will be key.

Not only will these areas help staff navigate a tough financial period, but

these focus areas will boost staff loyalty and ensure that the job offers on

the table work for the people who will face the most disadvantage of high living costs.

So, what are you doing to help them out?

(source Totaljobs)

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