The UK now has some of the highest minimum pay rates in the world, according to a report published by think-tank The Resolution Foundation this week. Its Low pay Britain 2023 report found that, among the world’s rich nations, only France, Korea and New Zealand currently have higher minimum wages, relative to median pay among full-time workers. Based on the current target path of the UK’s minimum wage, this is expected to surpass France and Korea’s minimum wage levels by 2024.
According to the report, this can largely be attributed to the introduction of the National Living Wage in 2016, which has had a significant impact on reducing hourly pay inequality.
However, while the UK is proving competitive when it comes to minimum pay levels, it is falling behind in a number of other areas impacting lower earners, including sick pay, parental pay and minimum holiday entitlement. Across the Organisation for Economic Co-operation and Development (OECD), the median replacement rate for statutory sick pay (or its equivalent) for a four-week period of absence was 64% for a private sector worker on average pay, compared with 11% in the UK.
When it comes to statutory maternity pay, in the UK this would replace 27% of earnings over a one-year period for a woman earning average pay in the private sector. This compares with a median replacement rate of 40% across OECD countries.
In the UK, this presents a real opportunity for employers to differentiate themselves from competitors, particularly in industries which traditionally employ high numbers of minimum wage workers. Each week, we hear from employers that are taking steps to provide benefits that go above and beyond what they are required to provide, in order to enhance the employee experience and enable the organisation to provide a higher quality duty of care during these difficult economic times.
This week alone, retailer Pandora increased pay for its hourly paid retail employees, while Toolstation gave its entry-level, store and operations employees a pay rise, as well as introducing enhanced paid parental leave well above the statutory minimum. In addition, the retailer has introduced a raft of initiatives to support new and prospective parents during their fertility journey.
As the cost-of-living crisis continues to bite and inflation remains high, taking steps to provide employees with benefits above statutory levels could make all the difference to employers’ recruitment and engagement strategies.
Employers that are really taking steps to support their workforces and make a difference through their reward and benefits strategies deserve to be celebrated. This week, we also unveiled the shortlist for the Employee Benefits Awards 2023. Congratulations to all our finalists. I look forward to celebrating with you all on 23 June!
Debbie Lovewell-Tuck
Editor
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