โNo one should be in work and unable to make ends meet, now or in the future,โ commented Katherine Chapman, director of the Living Wage Foundation. The UK campaign encourages employers to pay the real living wage.
Speaking toย HRย magazine, she said: โEveryone needs a wage that allows them to live, not just survive. Employers play a critical role in ensuring wages align withย living costs.
โThe real Living Wage is the only UK wage rate calculated based on the cost of living, currently set at ยฃ12 in the UK and ยฃ13.15 in London. It ensures that wages reflect the true costs of goods and services, and is re-calculated every year to keep up with living costs.
โOur research shows that paying a real living wage benefits not only workers but also businesses, leading to reducedย absenteeismย and improved productivity.โ
When workers are living comfortably on salary benefits everyone
The average annual salary is ยฃ35,828 including bonuses, according to June 2024 statistics from the Office for National Statistics.
Claire Williams, chief people officer of HR software Ciphr, toldย HRย magazine that employers have also struggled as a result of the cost of living crisis.
“Many companies have also been greatly affected by the continuing cost of living crisis. Ultimately this impacts revenue and profitability, and can impede an employerโs ability to meet demands for increased pay,” she explained.
However, employers should ensure that employeesโ salary remains competitive, Williams added.
She said: โItโs important for employers to do their research when it comes to pay, and regularly review their compensation strategies. Conducting surveys can give insights into employee sentiment, while salary benchmarkingย against industry standards ensures you stay competitive.
โYou must also consider the cost of living โ or the level of affordability (compared to pay) โ in your region when setting salaries or pay banding.โ
In January 2024, 28% of 3,450 people surveyed by the Financial Conduct Authority were not coping, or finding it difficult to cope, financially. Meanwhile 14% reported feeling heavily burdened by domestic bills and credit commitments.
Six in 10 (60%) employees reported that they worried about finances at least once a week in the three months leading up to May 2024, financial wellbeing platform Wagestream found. (This research was published in May 2024.)
Employers have a responsibility to support employees with their financial wellbeing, commented Jeanette Wheeler, chief HR officer at HR and payroll software MHR.
Speaking toย HRย magazine, she said: โSupporting employees to build their financial resilience and improve theirย financial wellbeingย is paramount for organisations. Itโs vital that HR educates its people on the available tools and routes to support.โ
The Bank of England announced a reduction in interest ratesย to 5% for the first time in a year on 1 August.
Meanwhile, the average pay award rose from 4.5% to 4.6% in the three months to June 2024, according to analysis of nearly 2m employeesโ pay awards by pay research organisation Incomes Data Research.
Employers should create a culture where employees feel supported with finances, even when the economy shows signs of improving, Wheeler added.
She said: โThe recent cut in interest rates from the Bank of England is encouraging and is hopefully a positive sign that financial pressures will ease in the future.
โHowever, regardless of the economic environment, organisations should always be proactive in creating aย cultureย where employees feel supported, one where they can be open and honest on any financial challenges they may be facing and there can be ongoing dialogue on support.โ
