The impact of low pay on staff engagement should be a key concern for HR, argues Duncan Brown
I went to a fascinating and important seminar this week on The Agenda for Tacking Low Pay, organised by the Resolution Foundation. The star speaker was the Liberal Democrat MP and Minister for Schools David Laws, with a supporting panel of experts from the Joseph Rowntree Foundation, TUC and the Daily Telegraph.
Laws spoke cogently on the coalition's strong record on jobs growth and not wanting to do anything to damage job creation. But he said that the Lib Dems in particular were increasingly interested in the concept of a living wage and recognised that the introduction of the National Minimum Wage in the UK has not damaged employment or job growth. The minister also said his party were concerned by the growing body of evidence on in-work poverty and poor employment practices, such as the spread of zero hours contracts, which his colleague and boss Vince Cable recently announced his department would be investigating.
The TUC's just-released research shows that the average UK worker is more than £2,000 worse off than they were 3 years ago in real terms. And with Aon Hewitt's latest international round-up of employee attitudes highlighting that pay has risen to third in the list of factors driving, or perhaps more accurately restraining, a recovery in employee engagement levels that might underpin economic recovery, low pay is clearly an issue that should concern all of us in HR.
When the Daily Telegraph's deputy editor Jeremy Warner speaks out in support of a living wage, citing corporate profits at record levels, while the government incentivises and subsidises low paying employers through over £5 billion of tax credits, and with weak consumption and demand holding back economic recovery, then you really start to believe we are seeing progress on this vitally important issue.
Amidst the charity leaders, policy wonks, economists and trade unionists in the audience, I didn't spot one other representative from the HR profession. In fact in my regular talks to HR audiences, I often find most delegates don't know what the living wage level is. (It's £8.55 per hour in London and £7.45 nationally by the way - I'm sure you knew).
It is vital that HR gets in on the low pay agenda, and fast. First, because in implementing their employer's policy for wage restraint they may actually be damaging their organisation's long-term performance and prospects, as well as the UK economy. 14 per cent of employers in Aon Hewitt's latest Salary Increase Survey plan freezes this year.
But second, as was evident from the Resolution Foundation Seminar, HR's skills and knowledge are vital to addressing the practical in-employer issues of how to move to a higher pay, higher productivity economy.
HR can play a critical role by:
- developing methods for linking pay to skills and competence, with Laws seeing improving skills as the probably the key means for addressing low pay;
- implementing schemes for sharing the benefits of higher productivity and performance with all employees, through all-employee profit sharing and share plans for example;
- distributing the total pay increase pot appropriately to help those employees most in need;
- implementing real talent management policies that enable everyone, whatever their background, to grow their skills, contribution and pay, and progress up through the organisation.
So where are you on the low pay agenda and what are you doing in your employer to address it?