PayFit, a payroll provider, has released a study that shows the UK’s workers are not satisfied with their salary. 89 percent of them say it does not cover their needs.
The findings follow the spring statement which detailed cost-cutting initiatives that were expected to increase financial stress on both employees and businesses.
In the latest economic policies of the government, significant cuts in welfare and departmental expenditures could result in a reduction of public sector services and jobs. The inflation rate is expected to reach a peak of 3.8 percent by July 2025. Meanwhile, the employer National Insurance Contributions will increase from 13.8 to 15% this April.
Already, many workers worry about keeping up with their cost of living. The end of household assistance schemes, an increase in stamp duty for first-time home buyers and rising utility bills will add to the financial stress.
Employees still feel underpaid, despite wage increases
Research shows that UK workers work more hours than their European counterparts. Yet, 30 percent of them feel that their pay doesn’t reflect their efforts. The National Minimum and Living Wages were introduced to improve earnings for low-paid workers. However, the level of dissatisfaction is still high.
Many workers are in need of financial help. 37 percent of workers said that a higher salary would enable them to achieve their financial goals. 31 percent thought a lower cost-of-living would allow them more savings. The upcoming NIC increase may place additional pressure on employers and limit wage growth.
Firmin Zocchetto is the CEO and co-founder of PayFit. He noted that the economic climate could make wage increases less feasible.
Zocchetto stated that many employees will feel the pinch as a result of the economic adjustments made in the Spring Statement. These include spending cuts, possible job losses, and rising inflation. This means that wage rises will be even less feasible and the current economic climate will become more challenging for UK workers.
Transparency in payment and financial assistance options
In addition, the research found that a lack transparency in pay is affecting employee trust. 38 percent of employees said that unclear communication about pay negatively impacts their trust in management. Only 16 percent reported that they had full confidence in their employer. The trust level dropped to 12 percent for those between 18-24 years old.
Zocchetto stated that companies need to consider financial well-being beyond salary increases.
Employers must think about other ways to reward and support staff, and how they can promote financial well-being. Benefits and support programs that are targeted, such as salary advances, salary-sacrifice schemes, subsidies for childcare, discounts on services essential, the option to sell back unutilized holidays, free food, and drinks, and subsidised travel, can help boost morale and ease cost-of-living pressures.
He also stressed that it is important to communicate clearly about pay, especially for younger employees who may struggle with financial literacy.
He added that “only by improving transparency and educating workers on how to get more out of their pay can we make them feel valued and supported in these difficult times.”
