With wage growth slowing, could employers offer other ways to incentivise workers?

In October 2024, the ONS reported^[1] the annual growth in total employee earnings including bonuses was 3.8%, behind CPI inflation, which averaged 5.7 per cent in 2023-24^[2]. This was lower than what UK employers expected, according to the CIPD^[3]. Job vacancies have been falling for twenty-seven consecutive periods but are still higher than before the COVID-19 pandemic.

The CIPD found that 55% of employers plan to keep their current staff levels, the highest percentage since winter 2016-2017. Keeping staff saves money on training and recruitment costs. Whilst higher pay is no doubt a popular incentive for employees, it might not be possible for all companies. But employers can offer other benefits to keep and attract employees.

Employees want a clear offer of benefits

A Hays 2024 report^[4] shows that more applicants now consider a clear employee value proposition (EVP) essential before applying for a job. What makes a company attractive and what benefits are most valued varies by age group. Younger people (30-39 year olds) often want work-life balance, while older workers may prefer comprehensive benefits. Employees expect a well-rounded approach to benefits that supports their health and well-being.

Our BHSF survey from July 2024 asked 1,416 people about their wellbeing priorities. Those aged 18-29 were most interested in gym discounts, while those aged 40+ preferred skin cancer screening. Those identifying as male were slightly more interested in heart health assessments than those identifying as female, who favoured skin cancer screening. It's important to choose a comprehensive EAP that addresses not just one sector or element of your employee wellness, but can support, with physical, financial, and mental wellbeing.

Could an employee assistance program be the answer?

Many of these benefits can be found in an employee assistance programme (EAP). EAPs can be a tax-efficient way to reward staff and retain them. EAPs can provide a range of services to support employees with workplace issues, but increasingly they also support personal issues too, particularly as people seek a more flexible approach to work-life balance.

Sources

^[1] https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/latest

^[2] https://obr.uk/fer/forecast-evaluation-report-october-2024/

^[3] https://www.cipd.org/uk/about/press-releases/pay-settlements-to-fall-as-employer-expectations-on-future-wage-rises-drop/

^[4] https://www.hays.co.uk/market-insights/article/what-workers-want-when-applying-for-jobs