LONDON – Britain’s financial sector is being urged to do more to help workers struggling with the cost of living crisis, despite a flurry of big-name banks offering one-time payments for low-income people.
Nationwide on August 15 announced a payout to more than 11,000 employees to help address the growing cost of living. The payment is aimed at people earning £35,000 ($42,300) or less a year, making up 61% of the workforce.
“The coming months will have a lot of people worried and we’re always looking at new ways to help our members. But rising prices also affect our colleagues and that’s why at Why are we providing this additional support,” said Debbie Crosbie, Executive Director at Nationwide Building Society, in a press release.
The world’s largest builder – a lender for property construction – is the latest in a string of UK-based financial institutions to offer employee aid.
The move makes sense, as the banking industry is reaping the benefits of higher inflation rates that are choking so many other industries.
As inflation – the rate at which prices rise over time – rises, so do interest rates, bringing in more income for banks. The Bank of England launched its biggest rate hike in 27 years on August 4, its sixth rate hike since December 16, 2021.
The UK’s biggest banks have raked in billions of pounds as a result of the Bank of England’s latest rate hike, with Barclays, HSBC Bank, NatWest, Lloyds and Santander holding up to £673.5 billion in central banks at the end of June, according to analysis of the British newspaper The Times.
Workers’ rights group Unite the Union has been lobbying for organizations, including banks, to financially support employees.
“We want to reopen pay negotiations that were closed,” Unite Country Director Dominic Hook told CNBC.
“Usually what happens is the pay year starts in March or April, so we’ll have pay negotiations usually at the end of the previous year… So what we do? was said, we agreed back last year but now we’ve got a cost – life crisis so we want to reopen the talks,” he said.
Some banks agree to negotiate a salary, while others opt for a one-time payment.
Wealth inequality
Lloyds announced a one-time £1,000 payment to 99.5% of its colleagues in June, excluding senior management and executives, while TSB offered the same amount to 4,500 staff. have an income of £35,000 or less.
Virgin Money offered £1,000 to employees earning £50,000 or less in August, and HSBC gave the lowest-paid workers £1,500 in living expenses in the same month.
These support measures may be welcome for employees, but they may not go far enough, said Ruth Thomas, director of product evangelism at employee compensation and management software company Payscale.
“We’re seeing some employers pay one-time bonuses to support workers through the cost of living crisis. While these may provide temporary relief for employees members have lower incomes, but they don’t address the core issues of inequality between institutions,” she said.
One-time financial perks may not be the best way to retain employees, says Thomas.
She told CNBC they want access to income growth over the course of their employment.
“In the context of rising cost of living and wage inflation, workers self-assess about reasonable wages … With a vibrant labor market, changing jobs is still the fastest way to increase wages.”
Changes in basic salary
Other financial institutions have made long-term changes to employee wages.
In June, Barclays announced a pay increase for its 35,000 UK-based employees. Those in customer, branch and junior support roles received a boost to £1,200 from their annual paytable effective August 1.
NatWest Group in July announced a permanent 4% pay rise for UK employees earning less than £32,000, while Santander offered a similar rate increase for UK employees earning less than £32,000. less than £35,000.
Cooperative Bank is providing support to more types of employees. Anyone earning up to £80,000 will get a £1,000 base pay increase from September. This follows a one-time payment of £300 to those earning up to £30,000 in September. Seven.
According to CEO Nick Slape, the bank is “committed to helping customers and colleagues during these difficult times”.
“This change in base salary will apply to about 95 per cent of colleagues across the Bank, excluding those already earning the highest salaries,” he said.
However, the salary discussions don’t stop there. Unite the Union has been thinking about next year’s salary negotiations.
“It won’t be long before we start thinking and discussing a pay rise next year, and our statement is certainly that everyone should get the least inflation,” Hook said.
“We don’t want people to have their actual pay cut. They will need a raise, no doubt,” he said.
Rising interest rates mean banks can offer higher wages, Hook told CNBC.
“Their margins are better on things like mortgages – they’re still making big profits, they’re doing great, so I don’t see why they can’t pay their employees properly .”
Challenger banks have appeared less often with one-time paychecks and raises.
A Revolut spokesperson said the organization “will support [its] employees as the cost of living rises around the world. “
“We continuously monitor the market and pay our employees in the upper quartile. In July we also introduced a new pay review process, in which we commit to factoring in local inflation rate so that our employees are paid fairly to reflect the rising cost of living,” they added.
Atom, Monzo, OakNorth, and Starling did not respond to requests for comment for this article.
