Companies face wage rises and increasing scrutiny on low pay

Companies face wage rises because of inflation and increasing scrutiny for any breaches of minimum wage payments.

Average weekly earnings in the UK have grown to 5.7 per cent, says research from the National Institute of Economic and Social Research (NIESR). That is the highest level in more than two decades.

While NIESR found little evidence of higher wage settlements, wages rose for recruits. In particular, the trend is most evident in sectors such as hospitality where there are labour shortages.

Changing patterns

Even so, workers are unlikely to feel better off. “Unless there is an acceleration in underlying wage growth, rising inflation will reduce any real wage gains next year,” Cyrille Lenoël Principal Economist, NIESR, said. “Households’ income will be further squeezed by the rise in national insurance contributions.”

In addition, vacancies rose to a record 1.2 million. The ONS, which published the figures, sited a mismatch between labour force skills and the pattern of labour demand in the later stages of the pandemic. It said the ratio of about four vacancies per 100 employees was the highest on record.

Wage breaches

Meanwhile, the government has “named and shamed” over 200 companies for paying staff less than the minimum wage. The Department for Business ordered groups to repay 12,000 staff shortfalls to their pay packets.

In addition, threatened to impose £2 million in penalties. Companies must pay 200 per cent of what they owe to the government in fines. The fines are historic, relating to HMRC investigations carried out between 2014 and 2019.

Businesses most commonly (37 per cent) reduce minimum wage pay through deductions. For example, they put workers out of pocket to comply with a dress code. Second, 29 per cent enforced unpaid working time, including mandatory training, trial shifts or travel time. Other breaches included underpaying apprentices or applying lower rates of minimum pay for young workers.

Anyone who has not been incorrectly paid the minimum wage who cannot resolve the dispute with their employer can report the issue to HMRC according to ACAS.

 

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