Pay satisfaction among UK workers has reached a new low, with 89 percent stating their current salary does not meet their financial needs, according to new research.
The findings, from payroll provider PayFit, come in the wake of the Spring Statement, which outlined cost-cutting measures expected to increase financial pressures on employees and businesses alike.
The government’s latest economic policies include significant welfare and departmental spending cuts, which could lead to reductions in public sector jobs and services. Inflation is forecast to peak at 3.8 percent in July 2025, while the increase in employer National Insurance Contributions (NIC) from 13.8 percent to 15 percent will take effect this April.
Many workers are already concerned about their earnings keeping pace with the cost of living. Rising utility bills, the end of household support schemes and an increased stamp duty threshold for first-time buyers will likely add further financial strain.
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Employees feel underpaid despite wage increases
The research shows that UK employees work longer hours than many of their European counterparts, yet 30 percent feel their pay does not reflect their effort. Despite increases in the National Minimum and Living Wages aimed at improving earnings for lower-paid workers, dissatisfaction remains high.
A significant proportion of workers feel the need of financial support. Thirty-seven percent said a pay rise would help them achieve their financial goals, while 31 percent believed a lower cost of living would allow them to save more. However, the upcoming NIC rise may put additional pressure on employers, potentially limiting wage growth as businesses manage increased costs.
Firmin Zocchetto, CEO and Co-Founder of PayFit, noted that economic conditions could make pay rises less viable.
“With the economic adjustments announced in the Spring Statement, including spending cuts, potential job reductions and rising inflation, many employees are set to feel the squeeze,” Zocchetto said. “This means that, unfortunately, pay rises are looking even less viable, and the current climate will become even more challenging for many UK workers.”
Pay transparency and financial support options
The research also noted a lack of transparency around pay, which is impacting employee trust. Thirty-eight percent of workers said unclear pay communication negatively affects their confidence in management. Only 16 percent of employees reported full trust in their employer, with trust levels falling to 12 percent among those aged 18-24.
Zocchetto said that businesses need to address financial wellbeing beyond direct salary increases.
“Employers must consider how else they can support and reward staff and promote financial wellbeing. Targeted benefits and support schemes – like salary advances, salary sacrifice schemes, subsidised childcare, discounts on essential services, options to sell back unused holiday, free food and drink and subsidised travel – can all go a long way in boosting morale and helping to ease cost of living pressures.”
He also stressed the importance of clear pay communication, particularly for younger employees who may struggle with financial literacy.
“Only by improving transparency around pay, and offering a better education and understanding of how to stretch pay further, can we ensure workers feel both valued and supported through these tough times,” he added.
