The Budget 2021 announcement on Wednesday (27 October) confirmed an increase to the national minimum wage (NMW), which has been welcomed by many employees who have been facing financial struggles during the Covid-19 (Coronavirus) pandemic.
Indeed, with the NMW rate rising from £8.91 to £9.50 next April, many low-paid workers are set to benefit from the 6.6% boost. However, it’s a fairly small win considering a significant number of people are still experiencing financial strain and are worried about their personal finances as the cost of living continues to rise.
Chancellor of the Exchequer Rishi Sunak also revealed the end of the pay freeze for those in the public sector, which could result in wage rises for 2.6 million employees.
Again, the move to return to the usual independent pay setting process has been applauded, but there are employees who are still facing financial struggles but won’t qualify for any pay increases or benefit financially from any of the announcements made in the Budget.
Findings from the Resolution Foundation this week certainly supports this case. Its analysis revealed that, despite the Chancellor’s announcements, real wage and pay growth is set to reach a standstill in 2022.
The think-tank warned that while average earnings are predicted to increase by 3.9% next year, they will probably be offset by inflation with the consumer prices index anticipated to reach 4.4%.
Employees with financial struggles are likely to struggle at work and may need additional support in getting back on their feet, as poor financial health can often also affect people’s mental wellbeing and productivity.
It’s therefore vital that employers use their initiative to help staff with their finances, and more importantly, their long-term resilience. They could consider offering free financial advice or providing employee benefits such as staff discounts, for example.
By ensuring they have a supportive culture, they will benefit from having a more engaged, happier and productive workforce.
Kavitha Sivasubramaniam
Editor
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