As we draw closer to the end of the year, the tension between employers and employees only seems to be heating up here in the UK.
Employees are going into 2018 expecting significant pay raises, but many employers aren’t prepared to offer them. This tension and discord are gearing up to cause substantial disputes in the workforce.
Employees are arguing that pay rises are necessary to keep up with inflation. Right now, unemployment is at a record low, which is good news for workers, and this should also be the basis for increasing wages. Thanks to a rather significant bump in inflation, however, the average wages have now dropped into the negative territory, which isn’t sitting well with employees.
The argument only continues to get more in-depth and more incensed as experts state that the current inflation level is 3% and should fall next year. Meanwhile, workers are asking for a 4% increase in wages. Now, employers aren’t saying no to increases flat out; instead they are looking to keep more in-line with inflation for 2018, offering raises of around 2.8%. The predicted rate of inflation for 2018 is forecast to be 2.6%, which means if employers offer pay rises, there will be a real wage growth of 0.2%.
As a business owner, what can you do in 2018 to keep your employees happy, give them an annual increase that works for both the company and them, and ensure that business proceeds as usual? Here’s a closer look at where things stand, and what kind of options are available to you.
Lagging Behind in Pay Raises
While it may seem like the expectation for a massive pay raise has come out of nowhere and is out of line, in fact, when it comes to wage increases, Briton lags behind. According to survey results, Briton is sitting in 23rd place out 26 difference countries. There are a lot of unhappy employees who are now expecting significant changes.
But, there are always two sides to each argument and employers are having a hard time justifying a significant pay raise when output isn’t increasing. Without that rise in production, employers argue that they don’t have the financial resources to pay for these raises.
It seems as though the pressure is applied on both sides, but both sides have a valid argument.
The Solution Lies in Compromising
Realistically speaking, it looks like the best solution is going to need to involve compromise on both sides. Employers can’t just tell employees there will be no raise at all when they are feeling so crunched by inflation. At the same time, they probably won’t be able to meet their employee’s high expectations. Compromising in the middle and at least offering a partial raise will at least give the employees something.
From the employer’s standpoint, the question then becomes how to pay for this raise? Let’s also point out that the Chancellor announced a rise in the National Living Wage in April of 2018. It will go from £7.50 to £7.83, which means those on a minimum wage will be guaranteed a raise. This just lights a fire under the rest of the workforce.
So, we go back to output, which hasn’t increased, so where is the money going to come from for a raise? Employers may want to look at more alternative solutions and research unsecured loans in to finance the costs.
This type of loan is ideal for businesses who are having a hard time raising money in the more traditional way. With this type of loan, you don’t need to secure it with assets, land, or anything else. Instead, the person borrowing the money must agree to cover it should the business not be able to pay it back. If you have a small force of employees, a good credit history, and low resources, the loan can work out correctly.
Companies tend to like these types of loans because they only pay the interest on what they owe. There is no need to put up the business’s assets as collateral, and if you use a company such as Merchant Money LTD, then the barrier for entry tends to be much lower than it would be at a traditional bank.
You can learn more about these unsecured business loans and how it can help you finance expected wage increases by visiting https://www.merchantmoney.co.uk/unsecured-business-loans/.
Keeping Everyone Happy
When it comes to the relationship between employees and employers, it is one that requires balance and hard work on both sides. At this time, employees are clearly feel as though the balance is off, and employers need to listen and come up with a compromise that works for all parties.