Recent findings indicate British firms’ limited response to inflation, affecting low-paid workers.
- Only 30% of businesses plan to raise pay above inflation, despite cost pressures easing.
- Over 60% of business leaders acknowledge their duty to assist employees during economic challenges.
- A significant portion of employers remain unable to provide financial support to their staff.
- High interest rates and stagnant wages exacerbate financial difficulties for vulnerable employees.
The recent survey, commissioned by the Work Foundation at Lancaster University, highlights a concerning trend among British businesses. More than 60% of senior business leaders recognise the substantial responsibility they bear in mitigating the cost of living challenges faced by their employees. Despite this, a mere 30% of these companies intend to implement pay rises exceeding the current inflation rate. This reluctance persists even as pressures on firms have marginally eased over the past 15 months.
A report by the Work Foundation reveals that since the beginning of 2023, only 38% of employers have introduced new measures to support the financial wellbeing of their employees. These measures include pay rises, extended benefits, offering overtime, or one-off cost of living payments. Conversely, 34% of businesses admitted their inability to offer any such support this year. This situation is compounded by the highest interest rates in 16 years and predictions by the Office for Budget Responsibility suggesting real wages may not reach 2008 levels until 2026. Such economic conditions continue to challenge low-paid workers, who struggle with elevated prices and housing costs.
Ben Harrison, Director of the Work Foundation, emphasises that the perceived reduction in inflation does not equate to an end of the cost of living crisis. ‘Inflation may be coming down but it’s wrong to think the cost-of-living crisis is over – the truth is it has evolved,’ Harrison comments. He highlights that a significant portion of businesses did not extend any support to their workforce in 2023, which disproportionately impacts the lowest earners.
The Work Foundation and the Pentland Centre for Sustainability in Business at Lancaster University commissioned YouGov to survey over 1,000 senior business leaders. Their findings indicate persisting issues such as rising production costs—reported by 35% of leaders compared to 41% in December 2022—and improved staffing situations, where 46% of employers reported no difficulties in recruitment or retention, marking a 16% improvement over the year.
However, over a third of these leaders expressed difficulties in implementing pay rises above inflation since the onset of the cost of living crisis. The prevalence of potential redundancies has remained stable with 18% of businesses considering this route, similar to the figures reported in 2022. As Harrison notes, ‘Our data suggests there continues to be a gap between what senior leaders think and feel, and the actions they take,’ stressing the need for sustained employer support as government assistance wanes.
Professor Jan Bebbington from the Pentland Centre for Sustainability in Business raises concerns about these findings in light of the Sustainable Development Goals. She asserts responsible businesses need to proactively engage in supporting the financial wellbeing of their workforce. Organisations are encouraged to seek opportunities for proactive financial support to align with goals of poverty reduction, health improvement, and broader access to essential income.
The pressing need for targeted financial support measures remains critical for the wellbeing of low-paid workers amidst ongoing economic challenges.
