Speaking on Good Morning Britain, Deputy Prime Minister Dominic Raab said that wage restraint from employers is necessary to avoid “a vicious cycle of inflation going up – and staying higher for longer.” His concern stems from the idea that rising salary costs will further drive-up prices for consumers.
But with the consumer price index reaching a 40-year high of 9.1%, forgoing wage increases will be a bitter pill to swallow for many UK workers. When adjusted for inflation, real wages fell by 3.4% in April compared to the previous year.
Many employers will find themselves caught in the middle: should they heed the warnings of ministers about the risks of spiralling inflation or provide staff with the pay rises needed to help them to keep up with the rising cost of living?
Steve Tonks, SVP – EMEA at WorkForce Software, sees how employers face a difficult choice.
“They either increase employee wages – when many businesses themselves are only just beginning to recover from pandemic-induced losses – or they risk losing staff to higher-paying employers,” he says.
Tonks suggests that Earned Wage Access (EWA) – a payroll scheme that allows employees to access their pay as soon as they’ve worked the hours – could be another way to alleviate current pay pressures.
He adds, “Although increasingly important in today’s climate, pay is not the only consideration for many employees. Considering the overall employee experience is a way to retain staff when pressure on wages is high.”