As employers look to fill staff gaps without having to commit to inflation-proof pay increases, the number of job ads offering bonuses has more that doubled since last year.
Companies have been trying to retain talent amid record-breaking levels of vacancies, despite growing concerns about the UK’s economic decline.
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According to Adzuna figures, the percentage of advertisements for recruitment offering bonuses increased from 13.6 percent, or 90.345, at last year’s beginning, to 16 percent, or 190.333 this month.
Paul Lewis, chief customer officer of the job search engine, stated that bonuses were rising across all sectors. He said that customer service, IT, and retail had seen “notable proportional rises in job advertisements for bonuses since January 2021.” This was directly related to the talent shortages caused by the pandemic.
The level of bonuses offered by different sectors varied greatly. Public sector workers earned an average PS2 per week, while private sector workers earn PS43 per week. According to the most recent figures from the Office for National Statistics, employees at banks and financial services companies received the highest bonuses. They averaged PS94 per week in May.
Last week, the government announced that the lowest-paid NHS staff (cleaners and porters included) would see a 9.3% increase in their salaries. The majority of public sector employees will receive increases of around 5%. In the three months ended May, private sector salaries rose by 7.2% including bonuses and 5% without bonuses.
Inflation, which reached a new 40-year high in June at 9.4 percent, is expected to continue to rise to 12 percent when households receive winter energy bills in October.
According to Xiaowei Xu (a senior economist at the Institute for Fiscal Studies), offering bonuses can help employers keep wages in line with inflation. However, it doesn’t create the expectation that workers will see significant increases in their wages. She said that if inflation falls, you can return to regular pay. However, it is hard to reverse a rise in wages when inflation is rising. It’s a smart way to cope with the cost-of-living crisis while not getting into the wage-price spiral.
Andrew Bailey, governor of the Bank of England was criticised for asking workers to exercise restraint in asking for raises. The central bank has also reiterated its concern that high expectations for wages could lead to further inflation.
TUC members have asked the government to take measures to reduce “excessive bonuses” and increase wages throughout the economy.
Duncan Brown, principal associate with the Institute for Employment Studies think-tank, stated that the increase in bonuses as a percentage of pay allowed employers the flexibility to adjust pay packets depending upon the company’s financial situation. He said that the trend in bonuses over the past 20 years has been to gradually increase. Bonuses, especially if they are performance-related, go up when there’s a good economy and down when they’re bad. That’s why they’ve been growing.”
While some companies may offer bonuses at their discretion others require workers to meet certain performance criteria to be eligible for them. Profit-share plans like those at John Lewis can be used, as well as one-off cost-of-living payments such as those offered by Virgin Money or Rolls-Royce to certain staff.
Brown believes that the need to make a cash payment for people who are struggling to pay the bills shows that wages for low-earners are too low. He said, “They need to address the low basic pay level as well.” We are forced to make emergency payments due to our appalling base pay levels. The government can claim that they are increasing the minimum wage faster, which is true, but it begs the real question: Why can’t you survive on the minimum wage?