Firms that are growing currently will want to make hay while the sun shines and could look to offer a pay rise to retain talent, or lure new recruits with a higher-than-average salary in 2021. However, given the competitive job market at present, employers may find this is not necessary and a rise matching the cost of living will suffice.
The situation is less rosy for other employers, which need to cut costs to survive. Even organisations that are keeping their head above water may still search for savings, given the immediate and medium-term economic uncertainty. Those cutting or freezing pay could look at ways to soften the blow, though. For example, they may be able to increase holiday allowances, or to invest more in staff wellbeing and development.
Employers may also be doing a tidy up of their benefits package to reflect better the world in which we now live. For example, a public transport season ticket loan may not be coveted in the current climate, but a cycle loan or car plan might. Since many people have taken a hit to their income during the pandemic, employers may also look to increase their workplace financial wellbeing offering.
In these fast-moving times, it is more important that employers check what employees think about their reward package. They should also be transparent about any changes, particularly pay, and communicate these in a clear and timely manner.
Many of these changes may end up being on a short- or medium-term basis and will be reversed once the economy rebounds. However, the crisis has shone a spotlight on the issue of fair pay, and many employers have been forced to reflect on their pay decisions. Hopefully this will lead to lasting change, with pay processes and outcomes being fairer and more employers paying a liveable wage.
Charles Cotton is the senior adviser for performance and reward at the Chartered Institute of Personnel and Development (CIPD)