“Employers are under pressure to go further to support employee living standards.”
Context
Employers are planning smaller pay rises next year despite inflation remaining above the Bank of England’s two percent target, according to new research from Brightmine, a provider of HR and reward data.
The organisation’s latest survey found that employers expect to award a median basic pay increase of three percent in 2027, down from the four percent that has become the norm over the past three years. The findings suggest organisations are becoming more cautious as they contend with higher employment costs and a weaker economic outlook.
Commenting on the findings, Sheila Attwood, HR insights and data lead at Brightmine, said: “With inflation still above the Bank of England’s 2% target and close to the current median pay award, employers may come under renewed pressure to go further than they are currently planning to support employee living standards.”
Meaning
Attwood’s comment reflects the difficult balancing act facing employers. While many organisations are seeking to contain costs, employees continue to feel the impact of higher household bills and may expect employers to provide greater financial support than pay awards alone can offer.
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The quote also suggests that reward strategies are becoming increasingly nuanced. As salary budgets tighten, employers may need to look beyond annual pay reviews and consider benefits, financial wellbeing initiatives and other forms of support to remain competitive in attracting and retaining talent.
Implications
The findings raise questions for HR executives about whether planned pay increases will be enough to maintain employee engagement and retention over the coming year.
If higher pay awards are not financially viable, organisations may need to communicate reward decisions more effectively while strengthening other aspects of their employee value proposition, including flexible working, career development and wellbeing support.
The comments also serve as a reminder that employees’ perceptions of financial security remain an important workplace issue. Employers that recognise the continuing pressure on living standards and respond with a broader approach to reward may be better placed to maintain trust and retain skilled staff.
William Furney is a Managing Editor at Black and White Trading Ltd based in Kingston upon Hull, UK. He is a prolific author and contributor at Workplace Wellbeing Professional, with over 127 published posts covering HR, employee engagement, and workplace wellbeing topics. His writing focuses on contemporary employment issues including pension schemes, employee health, financial struggles affecting workers, and broader workplace trends.
- William Furney
- William Furney
- William Furney
- William Furney
