This informal CPD article, ‘Key Insights from the CIPD’s Latest Labour Market Outlook on Employers and Employees‘, was provided by Money First Aid, who provide participants with the necessary knowledge and skills to assist their colleagues in overcoming financial difficulties, while also helping create a supportive and understanding work environment.
The Chartered Institute of Personnel and Development (CIPD) recently released its Summer 2024 Labour Market Outlook (LMO), painting a complex picture of the UK’s current employment landscape. One of the most concerning findings from this report is the anticipated slowdown in wage growth, which is expected to be the lowest since 2022. This trend has significant implications for both employees and employers, particularly against the backdrop of an ongoing cost of living crisis.
The Financial Health of Employees
With wage growth stalling, employees are likely to face increased financial pressures, particularly as inflation continues to erode their purchasing power. The expected minimal increase in wages is unlikely to keep pace with rising living costs, leaving many workers struggling to maintain their standard of living, let alone plan ahead for their financial future. The most urgent impact, however, is likely to be the worsening of existing financial stress, and the knock-on effect on employee wellbeing and mental health.
The link between financial stress and mental health is well-documented. Employers must recognise the potential impact of these financial strains on their workforce, not least because of the ripple effects on productivity, retention, and absenteeism. As employees grapple with the realities of reduced real income, their engagement and performance at work may suffer, creating challenges for organisations aiming to maintain a motivated and effective workforce, and hire for those hard to fill vacancies.
Addressing Job Quality and People Management Skills
The report highlights that nearly two-thirds (65%) of employers have either already enhanced or plan to enhance job quality by improving the training and development offered to their managers. This is crucial, especially in a time when wage growth is insufficient to fully satisfy employees' financial needs and line managers are one place employees will look to for support. Managers play a pivotal role in shaping the work experience of their teams, influencing performance, engagement, overall wellbeing and job satisfaction. Effective management can mitigate some of the negative effects of low wage growth by fostering a supportive and positive work environment.
CIPD Recommendations for Employers
The CIPD recommends that employers ensure managers have the necessary time and resources to effectively manage their teams. They also need the necessary time to complete any training to help them develop their skills to be effective in their roles. This includes providing access to training and advice, particularly for handling sensitive situations such as supporting employees who are experiencing financial difficulties.
The Labour Market Outlook report underscores the importance of addressing both the immediate and long-term challenges posed by low wage growth. In reality, this could look like signposting employees to expert support for short-term issues like debt crisis, or unaffordable bills, as well as showcasing workplace benefits like discount platforms to reduce their expenses. For the longer term, this might be ensuring they understand any workplace saving schemes and their workplace pension.
Money conversations are difficult for anyone to navigate, particularly in the context of the employer-employee relationship, when managers cannot offer a wage increase to their team who are struggling financially. Creating a network where managers can seek advice or mentorship from each other will go a long way in ensuring they also feel supported.
We hope this article was helpful. For more information from Money First Aid Training, please visit their CPD Member Directory page. Alternatively, you can go to the CPD Industry Hubs for more articles, courses and events relevant to your Continuing Professional Development requirements.
References
https://www.cipd.org/globalassets/media/knowledge/knowledge-hub/reports/2024-pdfs/8658-lmo-summer-report-2024-web.pdf
