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How can employers make pay go further without increasing the wage bill?
There has been an ongoing squeeze on people’s living standards that has been sustained for over the last ten years. Wages in many industries are continuing to fall when compared to the rate of inflation.
Wage growth in the United Kingdom has only averaged 2.85 per cent from 2001 until 2018, having reached an all-time high of 6.60 per cent in February of 2007 and then a record low of -2.60 percent in March of 2009 (Note 1). This long period from 2007 to 2018 has seen workers’ living standards become worse than a decade ago. Due to the economic uncertainty caused initially by the recession and now Brexit, many employers have been unable to award pay increases. These factors have in turn been impacting employers in their ability to recruit and retain staff.
This problem is especially acute for small businesses, whose staff budgets may not allow them to award bonuses or even modest pay increases and since April 2016 the government has frozen most working-age welfare benefits in cash terms, as higher inflation has eroded their purchasing power for the lower paid. With this in mind, how can employers help to make payments go further without pay rises?
A changing world of work
The support that small companies receive from the existing benefits industry to provide affordable employee benefits in addition to wages and salaries is poor. Too often the benefits providers demand large setup fees just for installing the complex benefits platform. Then, there is the additional cost of the benefits themselves, which may be beyond the employer’s budget spend.
Recently, the ONS (Office for National Statistics) has confirmed that there is a record high in terms of people in employment. There has been a drift from part-time to full-time work, with this finally beginning to push up wages. Total pay grew by 2.8% in the three months to January 2018 (See note 2). The pressure and the rewards that employers provide looks like it may now start to change.
A simpler and more cost-effective employee benefits solution
With the growth of digitisation, there are now providers out there that provide simple creative employee benefits solutions that can make a significant impact on your staff. There is a new breed of benefits provider coming into the market that can offer both voluntary benefits and employer-funded ones on a single low-cost platform that makes the provision of benefits in the workplace easy for small and large employers.
Costly flexible benefits platforms can be a thing of the past. The key advantage to employers of a simple solution is that the platform can host both voluntary benefits, which the employee funds themselves from their salary, as well as employer-funded benefits when there is a budget.
A platform that offers both voluntary and employer-funded benefits means that employers can avoid having to use multiple sites from multiple vendors and instead access different vendors from a single platform. The platform will not only help with the communication and messaging of what the employer offers but also offer free benefits as part of the platform set up.
It is important that the platform supports employee health and wellbeing by giving access to relevant health support and information. It is vital to check that a platform will allow customisation of not only the messaging but also of the look and feel in terms of things like the company logo and access to company documentation. Messaging is especially important as it will be a key tool to improve employee engagement and communicate the range of benefits that are provided in addition to pay.
Giving staff access to a wider range of benefits
Having a good simple benefit platform that has a wide range of benefits and perks can offer employers an important edge when it comes to hiring and retaining employees in tight labour markets. It becomes much easier to put together traditional benefits such as group life or a cash plan with non-traditional benefits such as EAP or a savings plan into one package.
Employers can elevate themselves from simply being a provider of a rewards and benefits package to much more of a facilitator, giving staff access to rewards and benefits that suit their life stage and lifestyles. It is important to always look at how those benefits are presented, for example for older workers healthcare might be a more important issue whereas for younger workers access to childcare or help with living costs with a retail discount scheme may be more of a priority.
The ongoing challenge for the business owners of medium and small enterprises in the UK is how to create organisations that offer excellent working environments, support colleagues’ lifestyles in and outside work, and which deliver relevant and engaging benefits to attract and retain staff – but increasingly in a very different but cost-effective way.
To find out more, check out our blog post What’s new in personalisation and health?
Note 1 & 2: ONS Data 2018.