UK businesses slow to increase pay despite less pressure, survey shows

A recent survey conducted by the Work Foundation at Lancaster University indicates that while pressures on UK firms have somewhat eased over the last 15 months, this relief has not translated into substantial financial support for workers. Despite more than 60% of senior business leaders recognising their significant responsibility to help employees with the cost of living, only 30% have plans to award pay rises above inflation this year.

The survey involved over 1,000 businesses and found that while 38% of employers introduced new financial well-being measures since the start of 2023, 34% were unable to offer any financial support last year. This situation occurs as high interest rates persist and real wages are predicted not to return to 2008 levels until 2026, according to the Office for Budget Responsibility.

Ben Harrison, director of the Work Foundation, highlighted the ongoing economic strain: “Inflation may be coming down but it’s wrong to think the cost-of-living crisis is over – the truth is it has evolved. Interest rates are at a 16-year high, inflation is still above target and there are groups of people who have been suffering more than most with the acute effects of financial hardship. A third of businesses were unable to any support their staff in 2023, and that will hit the lowest paid workers most.”

The report advocates for targeted support measures such as extending the Household Support Fund until at least April 2026 and encouraging businesses to provide pay increases that keep pace with or exceed inflation, especially for their lowest earners.

Professor Jan Bebbington, director of the Pentland Centre for Sustainability in Business, stressed the importance of aligning business practices with broader societal goals: “These findings raise concerns in the context of the Sustainable Development Goals – which should be acting as a north star for businesses. Responsible businesses are – and more should be – proactively seeking opportunities to support the financial wellbeing of their workforce now and into the future.”