Why should inequality and in-work poverty be the new priorities for reward leaders?

Last month I attended a British Standards Institute (BSI) stakeholder roundtable which made very clear that Covid-19 has ‘highlighted and exacerbated excessive inequality’. It was described alongside global warming as ‘one of the major challenges of our time’.

Why should inequality and in-work poverty be the new priorities for reward leaders?

The aim of the roundtable was to consider ‘how businesses and organisations can improve their positive impact in reducing income and wealth inequality’, and the role of standards in improving organisation practice. The government and employer policy agendas are merging; and as in addressing discrimination, both are proving critical to ameliorating the problems.

So how can HR and reward functions help to address income and wealth inequalities?

Poverty and Inequality: Why and how to address it

In their new report, Just Work: Humanising the Labour Market in a Changing World, Christian think-tank Theos make the moral case for addressing not just the impact of Covid on inequality, but also the longer-term drivers stemming from: “Three waves of disruption – the technological, the ecological, and anthropological – creating massive change in labour markets.” This will require, they argue, “a coherent response from employers, policy-makers and others”.

Interestingly, at the BSI roundtable while all of the employers present agreed why they and governments need to address the problem, there was much less shared agreement evident on the solutions to growing inequality and rates of poverty in key areas, such as:

  • The relative emphasis on state and employer actions – such as adopting a BSI standard or signing up to the London Mayor’s Good Work Standard.
  • The balance between voluntary initiatives versus compulsory and legislative action – such as introducing the currently mooted new right to flexible working, or banning Zero Hours Contracts and strengthening labour market enforcement.

So what can us reward professionals, practically and realistically, do to address this global issue?, The CIPD’s Charles Cotton highlights “three simple, low-cost things employers can do” in order to address poverty and poor financial wellbeing:

1. Pay a fair, secure and real living wage

Although this should be an important aim for all of us in whatever sector and organisation, Cotton notes that “the statistics prove that this is not enough”. Providing pay and career progression for all and especially low-paid employees is also critical to address in-work poverty and the UK’s stalling rates of social and earnings mobility.

IES’s UK and international work on progression for low paid workers highlights many innovative initiatives and examples of how companies, such as Corbin and King, Ambea care and Scandic hotels, have addressed labour shortages and boosted productivity through their HR policies in this space.

Even straightforward actions, such as carrying out an equal and/or gender pay audit and publishing the results can demonstrate to and reassure employees that pay policies are indeed non-discriminatory and fair, and I personally have seen significant growth in pay audit work during the pandemic which is heartening to see.

Theos’ recommendations include that “investors should add clear requirements on the fair handling of wages, benefits, agency work, outsourcing (including their supply chains) to the social criteria they look at within environmental, social and governance investing”.

Achieving the Living Wage Foundation’s Living Wage accreditation depends on demonstrating the payment of a Living Wage throughout an employer’s supply chain, as well as within its own workforce. We have seen growing numbers of employers signing up to this standard in the pandemic and multinational employers are moving on to consider how they can implement such approaches globally.

2. Introduce a financial wellbeing policy

The latest CIPD 2021 Reward Management Survey found that 12% of organisations have introduced an employee financial wellbeing policy because of the pandemic, taking the total number of employers with such a policy to around half of the more than 400 participants. The components of such policies are numerous, ranging from financial education and healthy eating regimes to employee assistance programmes.

As our many REBA surveys and webinars have shown over the past 18 months, Covid-19 has seen increased investment in and greater variety of these programmes, including for example mental wellbeing apps, virtual GPs, online counselling, and money and debt advice.

Surveying the current state of your employees’ financial wellbeing is a vital prerequisite to targeted action and improvement. There are many excellent tools and company examples available to support you in doing this, for example, based on research I led for the government’s Money Advisory Service.

3. Increase and improve investments in employee training and development

Tony Wilson, Institute Director at IES last month told the BBC: “The answer to rising unemployment is not extending furlough, but re-skilling people to take up the record number of new vacancies being advertised.”

The government clearly has an important role to play here, and many of us have been arguing for a revamped and more flexible Apprenticeship Levy scheme, as well as improvement and expansion to the £2 billion Kickstart job placement scheme for young people announced by the Chancellor last July.

My work with CIPD on digital learning in 2020 highlighted the huge boost afforded to this format by the pandemic and associated lockdowns. But we also found that 25% of employers had actually cut their training budgets, despite the widespread requirement for employees to operate in new ways and learn new skills.

Theos’ proposals in this area, to humanise work and the workplace, include more widespread sector and firm initiatives to reskill and help displaced employees into growing areas of the economy; and individual lifelong learning funds with contributions from government, employers and individuals.

The Future: Just Work, or just work?

Despite the confusion on the best ways forward, there was near-unanimous agreement with the Resolution Foundation’s Mike Brewer’s evidence presented at the roundtable that ‘inequality is among the most pressing issues of our time’. So I came away from our online roundtable feeling that this is very much the start of a major, sustained movement in the business world and in HR’s focus, rather than a temporary response to the privations and frustrations of Covid-19 that will disappear as soon as this virus (hopefully) does.

We may well be, as this roundtable suggested, at a critical inflection point in business practice and work and employee relations. REBA would be pleased to hear your thoughts on this post-Covid employment and rewards world, and the choices you are making right now, hopefully to create a fairer and more equal and engaging future for people in the UK workplace, with a wealth of relevant resources and material to help you on your improvement journey.

This article is an extract from Dr Duncan Brown’s paper Inequality, in-work poverty, justice: The new priorities for HR and reward leaders? which can be downloaded from the REBA reports section.

This article is written by Dr Duncan Brown, Principal Associate, IES.

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