DOD’s blog: Below-inflation pay increases hurt businesses

Why HR and reward need to work harder to prevent effective pay cuts

I want draw your attention to important research published this week about how the UK workforce has largely seen a pay cut over recent years.

Read: UK employees experience record pay cuts

Read: Pay packets in south-west England fall by 10%

I am concerned that the reaction of most people will be to shrug their shoulders and say: “It’s the recession, what can we do?”.

So please, stop and consider more deeply for a moment. The research raises crucial points about the negative impact of low wages on both business productivity and our country’s economic growth that are worth noting and acting upon.

Human resource and reward managers are in key positions where they can change this – for the good of staff (especially those on low wages), our businesses, our economy and to keep our tax burden down (if people earn enough they need less state support).

If we each do our bit it could have a big impact on all of us.

So, via Twitter, I have elicited some practical ideas from fellow like-minded people: Duncan Brown and Dev Raval.

@Dev_Rewards advised: as well as market benchmarking, compare to the living wage; show ‘real’ % increase adjusting for inflation; call out executive pay % increase differences.

@duncanbHR said: No HR people at Resolution Foundation event tonight with David Laws yet can contribute in many ways to deliver high business returns on higher pay. For example, developing higher skills and competence in workforce and linking pay to it; designing employee share and profit share plans.

Anyone out there also keen to keep this on the agenda? I am, and I am keen to support and learn from people and bodies who are working on this, so do get in touch.

Debi O’Donovan
Employee Benefits

Twitter: @DebiODonovan