Will a decline in living standards lead to demotivated employees?

15th February 2016

I’m a little worried.

I read the CIPP employee winter outlook report, gauging the views of 2074 employees in December 2015, and supplemented by further research in the form of the Labour market outlook survey of 1007 employees.

As expected Auto Enrolment is dominating the report, and reported by the industry media. But I read further into the other areas of the report and started to get a little concerned.

Interestingly there are some great positive indicators, and certainly the pension debate has some good news. I was particularly encouraged to see that forward thinking employers who increase contributions they make to an employee’s pension, if the employee increases their own contributions, really can make a difference in the commitment to save for the future. 66% of employees were encouraged to pay in more, with 41% making the maximum contribution.

All good stuff I hear you say. Furthermore 66% of workers are expecting a pay rise in the next twelve months, so happy days, right? Motivated happy employees thinking about their future and motivated to save more.  Maybe, but it’s not the whole story.

Hitting the brakes on pensions

A really strong statement in the report stated ‘Our concern is that now is not the time to be asking firms to contribute more. If they are forced to increase their contributions we would expect to see reductions in other elements of the reward package’

Hitting the brakes on pay

Nearly one in five employers are looking at postponing their pay review this year, and in 2015 only about half of those surveyed received a pay increase. Interestingly salary increase dissatisfaction was linked with keeping pace with inflation and 21% of respondents expect a fall in living standards this year. With the Living wage hitting our doorsteps in April it could be trouble ahead.

There is no doubt that some companies are getting this right, or can afford to get this right, but there are worrying cost implications for businesses trying to juggle everything and retain the motivation and commitment of employees.

Savvy employers are already all over this, shrinking their administrative overhead to concentrate on core money making activities, gaining control over their employees through better understanding of the wage bill, and using payroll data to create a lean organisation free of workforce related waste. The result may well create motivated employees, paid a decent wage and pension, and committed to company success