Pay rises and better in-work benefits needed to retain staff, report finds

The labour shortage will worsen unless organisations offer staff desireable incentives to keep them, including pay rises and better working hours.

Forty-one per cent of people in the three sectors hit the hardest by labour shortages – logistics and transport, hospitality, and social care – are considering leaving their job in the next year, according to a report by think-tank Autonomy and corporate governance consultancy Pensions & Investments Research Consultants.

Asked why they felt dissatisfied in the current role, 55% cite low pay, 48% feel there are better opportunities elsewhere, and 42% say their job is bad for their mental health.

Working hours are also a concern – 31% say long working hours are a source of dissatisfaction and 30% feel their working hours are too unpredictable.

Despite workforce planning becoming a board-level priority at many organisations, the A shortage of vision report says companies’ responses to labour shortages are falling short. Short-term retention bonuses and targeted recruitment drives are just “sticking plasters”, it says.

Asked what would keep them in these sectors in the long term, 73% of workers want a pay rise, 41% want better in-work benefits and 39% want a shorter working week with the same pay.

More than half of the 1,012 workers polled say their organisation has not offered any incentives to keep them, but a handful of employers are offering benefits that are in line with that employees want. Almost a fifth say their employer has offered a permanent wage rise, and around the same proportion have been offered flexible or part time work. Eighteen per cent have been offered training.

Will Stronge, director of research at Autonomy, said that worker shortages can be solved “fairly easily” by offering better working conditions.

“However the response by companies is falling far short of what is needed and unless they quickly come up with a better offer, our research suggests the crisis is going to get a lot worse in the next 12 months,” he said.

“The Covid pandemic has shone a spotlight on unfair and precarious working practices in Britain and it seems that workers have simply had enough.”

Alice Martin, labour specialist at PIRC, said there is an opportunity to recalibrate employment practices in the private sector, starting with the industries suffering with a significant shortage of workers.

“Rather than looking for quick fixes companies should be taking on board the views of their workforces and trade unions to find long term solutions,” she said.

The report’s recommendations include:

  • Significant wage rises in all sectors experiencing labour shortages. This could be achieved by limiting executive pay and/or improving conditions in the bottom pay quartile
  • Phasing out zero-hours or tiny-hours contracts in hospitality and social care
  • Offering employee status to all workers
  • Consideration of whether workers could be offered a shorter working week with no reduction in pay, which is likely to attract new staff as well as retain existing workers
  • Setting up worker councils in companies in sectors with the worst shortages
  • Requiring companies to disclose more data about their workforces, such as workforce composition, employment models, employee turnover and health outcomes.

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