In a revealing study that sheds light on the current state of employee compensation in the UK, nearly half of workers report that their salaries fall short of providing a comfortable living. This insight comes from a survey conducted by Viva Money in June 2024, highlighting a growing concern for HR professionals and business leaders alike.
Key Findings from the Viva Money Survey
- 47% of UK employees feel their current salary is insufficient for comfortable living.
- 48% consider themselves underpaid.
- 63% report needing an additional £13,217 on average to live comfortably.
These statistics paint a stark picture of the financial pressures facing UK workers in 2024, raising important questions about wage adequacy and employee wellbeing.
The Living Wage Perspective
Katherine Chapman, director of the Living Wage Foundation, emphasizes the importance of fair compensation:
“No one should be in work and unable to make ends meet, now or in the future. Everyone needs a wage that allows them to live, not just survive. Employers play a critical role in making sure wages align with living costs.”
The real Living Wage, currently set at £12 in the UK and £13.15 in London, is recalculated annually to keep pace with living costs. This wage rate aims to reflect the true costs of goods and services, providing a benchmark for employers committed to fair compensation.
Benefits of Paying a Living Wage
Research by the Living Wage Foundation reveals multiple advantages for businesses that pay a living wage:
- Reduced absenteeism
- Improved productivity
- Enhanced employee satisfaction and retention
These findings suggest that investing in fair wages can yield significant returns for employers in terms of workforce stability and output.
The Broader Economic Context
According to the Office for National Statistics, the average annual salary in the UK, including bonuses, stood at £35,828 as of June 2024. However, this figure doesn’t tell the whole story, as evidenced by the Viva Money survey results.
Claire Williams, Chief People Officer at HR software company Ciphr, notes that the ongoing cost of living crisis has impacted both employees and employers:
“Many companies have also been greatly affected by the continuing cost of living crisis. Ultimately this impacts revenue and profitability, and can impede an employer’s ability to meet demands for increased pay.”
Strategies for HR Professionals
Given these challenges, HR professionals must adopt proactive strategies to address salary satisfaction:
- Regular Compensation Reviews: Conduct frequent assessments of your compensation strategies to remain competitive.
- Employee Surveys: Gain insights into employee sentiment regarding pay and benefits.
- Salary Benchmarking: Compare your salary offerings against industry standards to maintain competitiveness.
- Regional Cost of Living Considerations: Factor in the cost of living and affordability in your specific region when setting salaries or pay bands.
The Broader Financial Wellbeing Picture
The salary satisfaction issue is part of a larger trend of financial stress among UK workers:
- In January 2024, 28% of people surveyed by the Financial Conduct Authority reported difficulty coping financially.
- 14% felt heavily burdened by domestic bills and credit commitments.
- 60% of employees worried about finances at least once a week in the three months leading up to May 2024, according to financial wellbeing platform Wagestream.
The Role of Employers in Financial Wellbeing
Jeanette Wheeler, Chief HR Officer at MHR, emphasises the critical role employers play in supporting employee financial wellbeing:
“Supporting employees to build their financial resilience and improve their financial wellbeing is paramount for organisations. It’s vital that HR educates its people on the available tools and routes to support.”
Action Steps for HR Professionals
- Conduct Regular Salary Reviews: Ensure your compensation packages remain competitive and aligned with living costs.
- Implement Financial Wellbeing Programs: Offer resources and education to help employees manage their finances effectively.
- Consider Total Rewards: Look beyond base salary to provide a comprehensive benefits package that adds value for employees.
- Open Communication Channels: Foster an environment where employees feel comfortable discussing financial concerns.
- Explore Flexible Work Arrangements: Consider options that might help employees reduce living costs, such as remote work opportunities.
Looking Ahead
As we navigate the complex landscape of employee compensation in 2024, it’s clear that HR professionals face significant challenges. However, by prioritizing fair wages, implementing comprehensive financial wellbeing strategies, and maintaining open dialogue with employees, organizations can work towards creating a more financially secure and satisfied workforce.
The road ahead may be challenging, but with thoughtful strategies and a commitment to employee wellbeing, HR professionals can play a pivotal role in addressing the salary satisfaction gap and fostering a more resilient and productive workforce.
Vadim Kouznetsov is a distinguished entrepreneur and the visionary founder and CEO of JobXDubai.com, the UAE’s rapidly expanding job board. Renowned for his expertise in bridging the gap between job seekers and employment opportunities, Vadim has become a leading authority in the recruitment and job market of Dubai.