The majority of businesses will need to adjust their pay structures as a result of the national minimum wage increases in April.
Brightmine, a HR insights firm, conducted an analysis on the impact of employee retention and pay differentials.
Brightmine data indicates that nearly 60% of organizations will have to increase wages. Three-quarters expect challenges with pay gaps between different job levels.
The national living wage will increase from PS12.21 to PS12.21 for those over 21 years old. For 18-20 year-olds, it will go up to PS10 an hour. And for 16-17 and apprentices, the rate will be PS7.55 an hour.
Brightmine’s HR insight and data leader, Sheila Attwood said that businesses will have to be aware of the potential for employee discontent over the changes.
She said: “One of our biggest challenges is that lower-paying bands are catching up to the next level.
Nearly seventy-four percent (74.3%) of the affected organisations anticipate that pay differentials will be squeezed. This can lead to pay compression issues as well as potential dissatisfaction for more experienced employees.
She said that organisations who anticipated the changes had reviewed their pay structures. They did this by either adjusting salaries at multiple levels, setting minimum differentials or even changing their grading system. Attwood said that some organisations are looking at alternative solutions, such as retraining employees, providing bonuses or improving benefits, to keep staff motivated and retain them.
“Employers must have a strategy in place to deal with these changes and remain competitive, while maintaining a fair and structured progression of pay.”
Neil Carberry, chief executive of the Recruitment and Employment Confederation, said that based on February poll results, businesses were more optimistic this spring. The impact of the increase in national insurance was still “as if a fog” hanging over businesses.
He said that respondents to the REC survey were optimistic about hiring permanent staff in short-term.
Carberry stated that employers “felt most confident about hiring permanent employees in the medium term (the next 4 to 12 months). The medium-sized companies (50-249 workers) showed the greatest optimism about permanent hiring.
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