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12 Aug 2022
by Dawn Lewis

Top 10 stories from this week: Inflation may fuel wage disparity 

Evidence suggests high earners are more likely to receive inflation-matching pay rises than lower earners

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Reward professionals have the unenviable task of trying to manage wage expectations, while considering the wider economic picture to prevent prolonging high inflation. It’s an issue that the governor of the Bank of England has once again warned about, urging workers not to seek inflation-matching pay rises, due to concerns that inflation will become embedded. 

Speaking to BBC Radio 4’s Today programme last Friday, he said: “If everybody tries to beat inflation – and that is in both price-setting and wage-setting – it doesn’t come down, it gets worse.”

Yet, there is evidence that inflation matching pay rises are being given – predominately to higher earners. Research from the Centre for Economics and Business Research showed that in May 2022 (the most recent data available) 99th percentile earners received average pay rises of 9.1% – close to the 9.4% inflation across the country – as opposed to 10th percentile earners who had pay rises of 1.3%.

Although it is unclear just how widespread this issue is, these figures suggest that wage disparity could grow between the lowest and highest earners. At a time when the government has been focused on ‘levelling-up’, growing wage disparity is certainly of concern. Reward professionals should be on their guard to ensure that low earners – who are disproportionately affected by the cost of living crisis – are not left behind.

For more reward and employee benefits news you might have missed this week, read our top 10 snippets below: 

High-earner pay rises threaten inflation spiral

HR Magazine The top 1% of earners in the UK are getting pay rises in line with inflation, while the country's lowest earners are not.

Research from the Centre for Economics and Business Research (CEBR) showed people in the 99th percentile of earners in the country have routinely had the largest average pay rises since the start of the year, peaking at 11% in March 2022. Read more

John Lewis boss: Over-50s quitting the workforce fuels inflation

BBC An exodus of over-50s who left the workforce during the Covid pandemic is fuelling wage inflation, says the boss of John Lewis.

Dame Sharon White said any government must think "really hard" about how to get more older people back into work. Read more

Amazon warehouse staff engage in slowdown strikes over pay

Employee Benefits Employees working at Amazon warehouses have launched ‘slowdown work’ protests in order to draw attention to issues around pay.

The action originally started on 4 August, when staff at a warehouse in Tilbury, Essex walked out in protest of the retail business’ pay offer, which amounted to a 35p per hour increase. Read more

Ethnicity pay gap persists regardless of high company pay levels

HR Magazine Male employees from ethnic minority backgrounds are earning on average 10% less than their white colleagues within the same workplace, according to Bayes Business School research. For women the gap was 7% in favour of white women. Read more

Sharp rise in firms offering enhanced parental leave packages

Personnel Today Employers are more than twice as likely (102%) to offer enhanced parental leave packages compared with last year, analysis has shown.

According to hiring website Indeed, the UK is shifting to a more inclusive approach to parenting and childcare. Read more

High employee turnover damaging company culture, research suggests

People Management Increased employee turnover is leading to the deterioration of company culture, a report has found.

Research published by Wiley Edge as part of its The hidden costs of onboarding graduate talent report found that company culture had suffered in almost two-thirds (63 per cent) of UK businesses as a result of high staff turnover. Read more

Warning of early pension access implications

Professional Pensions Around 13% of savers have, or plan to access, their pension savings earlier than planned, according to research by Canada Life. Read more

Employers must ensure benefits schemes remain in place for staff: Partners&

Cover Magazine Partners& has warned employers that adjusted spending commitments taking into account the cost of living crisis must ensure employee benefit schemes remain in place for the workforce. Read more

Zero-hours contract benefits ‘can outweigh negatives for workers’

Personnel Today New research into zero-hours contracts suggests that the benefits in terms of flexibility and wellbeing outweigh the downsides for many workers. Read more

HR urged to be proactive as HMRC receives 14,000 furlough fraud whistleblower reports

People Management Legal experts are warning HR professionals of the consequences of workers whistleblowing on their former and current employers for coronavirus job retention scheme fraud. Read more

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