Ahead of the General Election on July 4, the manifestos are out and whichever party wins, it looks likely that some clear changes will come into effect that could have a major impact on the reward landscape.

Changes to the NMW

The Low Pay Commission recommends minimum wage rates each year, based on a remit set by the Government. The current projected range for next year’s National Living Wage (NLW, the minimum wage for workers aged 21 and over) is £11.65 - £12.18, with a central projection of £11.89, although forecasts could change over the year.

Labour plans to remove age bandings on the National Minimum Wage, so that all workers earn at least £10 per hour. They’ve also proposed bumping up sick pay and making it available to all workers. The Green party has proposed an increase in the minimum wage to £15 an hour, no matter your age, with the costs to small businesses offset by reducing their NI payments. And the Lib Dems want to set the minimum wage 20% higher for people on zero-hour contracts at times of normal demand to compensate them for the uncertainty of fluctuating hours of work.

All this points upwards, to the likelihood of more increases to our lowest paid workers. Good news for those workers, but tough for business owners struggling to find the additional sums.

Key questions:

• How will this affect businesses’ bottom lines?
• How will pay differentials be maintained for other employees earning more?

Innecto says:

When assessing your annual review pay pot, we recommend taking these mandatory increases into account alongside the need to maintain existing differentials. Our Advance pay review digital platform is already helping many businesses in this area.

Public sector pay

All parties have pointed in their manifestos to an increase in resources for the NHS. Labour, for example, want 8,500 new mental health staff on the NHS and more appointments across the board, but the question is how this will be managed and implemented. With dwindling numbers of nurses, midwives and doctors, will additional pay be earmarked for certain roles? With a likely crackdown on net immigration, we need a long-term plan with a focus on building career pathways from UK schools, colleges and universities.

The Reform party may not stand to win seats, but they are creating noise around increases to armed forces basic pay and are demanding an urgent armed forces pay review. It is unclear what this could look like, but it stands to affect upwards of 140,000 state employees.

Working hours

Last year, 61 organisations in the UK committed to a six-month-long four-day working week trial, with no fall in wages. The findings suggest that a four-day week significantly reduces stress and illness in the workforce and helps with worker retention. Some 71% of employees reported lower levels of “burnout”, and 39% said they were less stressed, compared to the start of the trial. Researchers found a 65% reduction in sick days, and a 57% fall in the number of staff leaving participating companies, compared to the same period the previous year. 

Overall, productivity was found not to be adversely affected, and revenues increased marginally by 1.4% on average for those able to provide data. Perhaps as a result, the Green party has pledged to reduce working days from 5 to 4, while keeping full-time hours and with no loss of pay.

Key questions:

How would this be managed across all industries?

What might be the unintended consequences of such a measure?

Innecto says:

The ability to work flexibly and provide the balance between home and work, has in recent years become a crucial part of an employer EVP. If you would like to discuss how we can support you with your wider EVP please get in touch.

Changes related to the Pay Gap

Labour wants to develop on the work already done in this area in recent years by requiring large employers to publish pay gaps for ethnicity and disability, as well as gender.  Those companies would also need to develop, publish and implement action plans to close existing Gender Pay gaps. Meanwhile, the Lib Dems want to develop measures to end the gender pensions gap in private pensions.

At Innecto, we combine a consultative approach with our market-leading digital platforms enabling a revolution in Job Evaluation, Pay Benchmarking and Pay Review to help support organisations on their journey on pay equity.

If you feel you could benefit from help and advice with any aspect of Pay and Reward, please get in touch to chat with a consultant or request a platform demo.

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