Over a third of businesses say the introduction of the national living wage (NLW) is putting pressure on them to increase wages, according to research carried out by the Reward and Employee Benefits Association (REBA) in association with JLT Employee Benefits
The New Model Reward Research 2017 was carried out amongst 183 pay, reward and benefits specialists working across a variety of organisations and industry sectors, and looked at the challenges faced by HR managers over the coming year.
Top of the list was the growing demand for employers to increase basic pay, with more than a third of the respondents (36%) agreeing that the NLW was putting pressure on them to increase their base wage. Additional pressure for increased pay was also coming as a result of the national minimum wage (NMW) (27%), future gender pay reporting (21%) and pension lifetime allowance changes (11%).
The research suggested that economic uncertainty meant simply increasing salaries during was not a viable option, and as a result, a growing number of respondents are looking to improve their employee benefits offering. Three quarters (76%) reported there will be an increased focus on employee benefits by 2025.
Respondents also said employers needed to tailor their rewards offering to a much wider variety of needs as a result of a number generations now working alongside each other in the workforce. Just over a fifth (21%) said they were looking to improve benefits for today’s graduates – also known as ‘Generation Z’ – with 14% saying they would improve benefits for older workers.
The survey also highlighted that pensions were still high on the agenda for most of the respondents, with 90% offering more than the legal minimum contribution to their employees. There was also a huge rise - over 75% - in the demand for pension advice and education on pensions, which researchers suggested was possibly as a result of the influx of new pension savers created by auto-enrolment and the new pensions freedoms.
Andrew Drake, head of reward and benefits at JLT Employee Benefits, said: ‘It’s clear from the research that as a result of the pressure to increase pay, employers are rethinking their approach to reward and benefits, and I think we’ll see a shift towards doing more through benefits over the coming years.
‘It is also encouraging to see that a growing number of employers are addressing the emerging demands of an increasingly diverse workforce, and understanding that the days of a “one size fits all” benefits solution for employees have long gone.’
