A recent announcement by publishing firm Hachette UK stated that they have conducted a ‘holistic review’ of starting salaries, holiday benefits and exceptional pay review due to the cost-of-living crisis.
They have committed to increasing starting salaries on 1 January 2023 to £26,500 p/a in London and £23,850 p/a outside of London. This decision has prompted the exceptional pay review as well as an investment of £2 million aiming for the percentage increase to reach more roles.
This investment coincides with performance-related bonuses, which will be eligible for all staff in December. They have also increased holiday entitlement to 29 days after 2 years of service – with an increase to 30 days after 5 years.
An additional initiative of making a non-consolidated payment of £1,000 will be given to employees to support them in the current economic situation. This payment will not be given to most of the senior team and will be applicable to publishing and distribution staff.
READ: Flexible Working: Making Requests from Day One
Why the Salary Increase?
The intensifying cost of living crisis and inflation has not prompted many companies to implement pay rises. According to the UK Office for National Statistics (ONS), average wages have risen slower than prices – with an inflation rate in October 2022 reaching 9.6% and total pay rising only by 6.0%. This shows that on the national scale, workers need more of their pay to buy the same goods.
Group HR Director of Hachette UK, Lisa Waterman has stated that these initiatives are implemented as their way to continually attract the best talents for their business. Furthermore, they are looking to create a more inclusive workplace – increasing their support for new and current staff while committing to employee retention. The holistic approach of also increasing holiday entitlement was made to also contribute to employee wellbeing.
Should Others Follow Suit?
Considering the current state of the economy, yearly pay rises that are below the current inflation rate can be considered as a pay cut. It is recommended that employers have a percentage pay rise that matches the inflation rates. However, this may be difficult to request for some workers as rising inflation is an issue experienced by all and will be unlikely to be an acceptable reason for a pay rise.
With increasing prices, it will be very tempting for talent to seek other roles in other firms with better pay. Many have regarded salary as the most important job factor in a cost-of-living crisis as it can protect them from rising costs. To retain talent in current times, employers should consider increasing pay to better support their employees.
READ: Long Covid Still on the Loose: Older Employees at Risk
Ultimately, leaders and HR professionals of organisations should act strategically and decisively to stay in the competition. If no changes or initiatives are introduced to better support employees, there will be a higher chance of employees leaving to seek better opportunities.
Although pay rises will not solve inflation on their own, considering strategic pay rises and incentives is crucial for the current market. If employers cannot afford to implement pay rises or other extra monetary support, they should ensure open communications to discuss alternative ways to support employees in order to come to a consensus that will be best for all.