The Chartered Management Institute(CMI) has undertaken new research that has found that while half of the companies are providing basic pay awards, 48 per cent reported that no raises are being offered or they did not currently plan to provide any this year.

The results, while disappointing for many employees, are somewhat unsurprising given the cost crisis that many businesses currently face.

This is reflected in sentiments from the study, which showed that one in three private-sector managers were worried about the financial health of their company.

Even those offering pay rises were only awarding a 2.8 per cent rise on average, which is well behind the rate of inflation, which is expected to spike above eight per cent by the end of the year.

This may mean real-term pay cuts for many employees at a time when they are experiencing one of the worst cost of living crises in recent memory.

Perhaps more concerning is that many CMI respondents said that their organisation had plans to look at negotiations, budget reductions and expenditure streamlining, which might include restrictions on some in-work benefits such as cycle to work schemes, eye care vouchers, employee assistance programmes and free tea, coffee and cold drinks.

Alternative remuneration

Many businesses are concerned about employment costs rising but they also cannot ignore ‘The Great Resignation’.

With many skills high in demand, employees are looking for better conditions and pay elsewhere and are resigning and quickly finding new work.

Employers need to be aware of this and look at other tax/cost-efficient rewards that can be offered to key persons, such as:

• Salary sacrifice schemes
• EMI share options
• Low-cost loans
• Enhanced pensions

If you are struggling with employment costs or would like to know how you can offer other tax-efficient benefits alongside a regular salary, please speak to us.