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One in five pay awards remain frozen

Many employees would say that pay and bonuses are their biggest motivator at work. While benefits like pensions, wellbeing initiatives and learning & development opportunities make for a happier and more productive workplace, employers also need to get the basics right -- and that means regularly reviewing and increasing pay.

However, with thousands of businesses still reeling from the impact of the pandemic, and an uncertain economic outlook, new research shows that pay awards are below levels seen a year ago.

Online HR specialist XpertHR found that more than a fifth (21.1%) of all pay reviews for the three months to the end of October 2020 led to a salary freeze. The median basic pay award across both the private and public sectors was 2%, compared to 2.5% a year ago.

This time last year the top quarter of awards were worth 3% or more -- whereas now, the figure is just 2.2%.

The 12-month pay award figure is also down on last year in the private sector, Personnel Today reports. In the 12 months to the end of October 2020 the median pay award was 2%, down from 2.5% in the year to October 2019. In the public sector, pay awards remain unchanged over the 12-month period, at 2.5%.

Ikea is among the UK employers that have opted to freeze employee pay for the next year as a result of lower sales due to Covid-19 lockdown restrictions. The company also put on hold its plans to become accredited as a Real Living Wage employer.

Meanwhile, Lloyds Banking Group cancelled its bonus payments for 2020 and Chancellor Rishi Sunak has hinted that this week's spending review will include a public sector pay freeze.

Frances O'Grady, head of the TUC confederation of trade unions, urged the UK Government to rule out a pay freeze.

"If you want to motivate a workforce when we are still facing a second wave of a pandemic, and we're going to have a tough winter -- we all know that -- the last thing you do is threaten to cut their pay," O'Grady told Sky's Sophy Ridge on Sunday.

Commenting on XpertHR's quarterly findings, its pay and benefits editor, Sheila Attwood, said: "So far this year around one-fifth of all pay reviews have resulted in no movement in pay for employees.

"While a desire to save jobs is a focus for some, others are struggling with the funds to recognise the very employees who have kept their businesses going through the pandemic. With a second national lockdown now in place, organisations need to look out for their workforce and keep them motivated ready for when the economic recovery happens."

Together with pay and bonuses, employee benefits are an essential part of the total reward package, helping to keep your employees engaged and motivated. From pensions and group risk to financial education and health & wellbeing, if you're looking for employee benefits solutions that are tailored to the needs of your business and your employees, Fidelius can help. Contact us today to find out more!

Posted on November 23rd 2020

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