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August 25, 2022

Higher salary will become more valued to employees over benefits as the cost-of-living crisis escalates

By GlobalData Financial

GlobalData’s 2021 UK Insurance Consumer Survey and 2021 UK SME Insurance Survey indicate that both employers and employees feel a higher basic salary is more important than a benefits package. 41.1% of employers recognize that employees put more significance on salary – slightly below the 45.9% of employees who value salary highest. As the cost-of-living crisis continues in the UK, more and more employees will put greater emphasis on a higher salary.

It is clear that employees generally understand the needs and demands of employees when it comes to the tradeoff between salary and benefits package. With UK inflation standing at 10.1% at the time of writing, it is likely that employees will value a good basic salary even higher as incomes continue to be squeezed. While some consumers do value a benefits package more than salary, employers could be wise to look to support their workforce through the coming difficult months with an increased salary.

That being said, clearly not all companies will be able to deliver on this, with pressure also mounting on firms in the form of growing energy bills and supply costs. Although less in demand among employees, companies could look to support their workforce through non-salary benefits such as mental health clinics or more flexible working hours. Employers that offer private medical insurance to their employees (32.4% of SMEs according to the 2021 UK SME Insurance Survey) will be able to offer perks including wellness clinics and wellbeing through their insurer.

Source: GlobalData’s 2021 UK Insurance Consumer Survey and 2021 UK SME Insurance Survey

A recent survey by Champion Health cited financial pressures as one of the leading causes of stress outside work. 30% of employees reported such a strain on their mental wellbeing outside the workplace, with only relationships noted as more adverse to mental health (33% of respondents). For younger employees, this figure increases to over a third of all employees experiencing financial pressure aged between 25 and 34. While increasing metal support for this cohort of the workforce could lead to reduced stress in this area, it is likely this support will be of secondary importance to explicit financial support by way of a higher salary.

The UK is facing a period of economic hardship not seen since the 1980s. Employers should look to help their workforces through such times. Ideally for employees (as also acknowledged by firms themselves) this would be through a higher salary, but any form of support in the form of financial or non-financial perks would be well received.

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