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 from SD Worx, a leading European HR solutions provider.
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.