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How to support employees as pay falls behind inflation

Workers are feeling the pinch as wages are rising at their fastest rate in more than 20 years, but still lag well behind soaring inflation.

The BBC reports that pay rose by 5.7 per cent in the year to September, the fastest growth since 2000, excluding the pandemic. But when adjusted for rising prices, wages fell by 2.7 per cent.

The cost of living is currently rising at its fastest rate in almost 40 years, largely due to the war in Ukraine.

Strict budget

ManpowerGroup, one of the UK’s biggest recruiters, told the BBC that the gap between wages and prices was “putting more and more pressure on households”.

For businesses, it is a dilemma, how do they attract and retain staff when they cannot afford pay rises in line with inflation?

There are many attractive ways to recognise employees for their efforts. Making sure the company can afford them and following a strict budget is a priority when developing reward schemes.

There are many creative ways in which staff can be rewarded, but you should always be aware of potential tax liabilities, so check with your accountant.

Rewards could include:

Employee share scheme

A share scheme is a way of sharing company ownership with your team. You can reward one or more key people with equity, or all of your employees.

Monthly bonus scheme

Reward the top performers whose efforts benefit the company’s bottom line.

Provision of meals

It can be expensive, but free or subsidised meals free meals at work are a practical and sensible way to look after staff wellbeing.

Training and Education

A winner for both parties, it improves employee retention and allows them to improve their skills, which shows the employer supports their professional goals.

Time off

Consider four-day work or flexitime, offering an extra day off, or even leaving a few hours early on a Friday. It will build staff morale and ultimately benefit the business.

Need help and advice on the taxation of employee benefits? Contact us.

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