‘Unsustainable’ pay inflation is driving a need for better benefits

Responding to the latest labour market statistics from the Office for National Statistics (ONS) which show that pay has fallen when adjusted for inflation despite average salaries increasing, global employee pay company, CloudPay, has warned that more sustainable benefits packages need to be adopted.



John Pearce, SVP Payroll Operations at CloudPay, commented:

“It’s clear that the rising cost-of-living is continuing to put significant pressure on businesses as staff and potential new recruits seek higher pay packages in what remains a tough economic climate. However, with inflation creating a scenario where this salary inflation is having little to no impact on household budgets, firms are seemingly facing an unsustainable level of demand for pay increases.



“The challenge, of course, is that employers are already struggling with skills shortages, meaning that many are having to use pay inflation as an attraction and retention tool. But this can only be sustained for so long and businesses will need to find an alternative soon. We do anticipate that benefits packages which are more cost-effective for businesses longer-term will be increasingly relied on. That includes flexibility around pay solutions that allow individuals to control when and how often they access their pay to help mitigate against some of the budget challenges that the UK population is facing.



“Whatever the solution, something does need to change to shift this heavy reliance on pay inflation to something that adds more value to employees without breaking the bank for businesses.”



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