Nearly three in 10 (29%) of UK employers are planning to cut employee benefits, while more than a quarter (27%) are likely to implement pay freezes this year.
The findings from Ayming UK revealed that organisations are tightening their belts in the face of current economic challenges, with nearly half (49%) expecting to reduce costs and more than a quarter (26%) imagining they will be making redundancies throughout 2023.
The HR consultancy’s HR Barometer 2023 further showed that 37% of employers are slashing recruitment, while nearly nine in 10 (89%) seeing a decline in employee engagement and motivation.
Scott Ward, partner – people, performance and development at Ayming UK, said: “It is clear from the economic crisis over the past few months that organisations would need to respond accordingly. This has meant that some have had to freeze pay increases or make redundancies.
“While this is not something many have been used to over the last year or so with such a buoyant employee market, it is something that will need to be approached cautiously. Organisations will need to revisit their operating model in relation to how they engage their workforce during these times.
“Communication will be key, discussing potential traumatic outcomes with their teams, and establishing a point of real vulnerability from an organisational perspective regarding showing the realities of their position and involving teams in the process itself within reason. Organisations now need to think about how they can reach their objectives through a more humanised model moving forward.”
One of the more positive findings highlighted in the report was that many organisations are looking into working practices and are implementing new initiatives to help their staff overcome any challenges.
Nearly three-quarters (73%) of those surveyed back the introduction of volunteer programmes, with a similar percentage (72%) supporting the provision of financial guidance to help people through the cost-of-living crisis and offering childcare solutions. Seven in 10 (70%) are in favour of offering therapy for workers, while 63% support the idea of helping staff get onto the property ladder.
Ward commented: “This makes me happy to see. Some of these benefits could have a really positive impact on people’s lives. The concept of employment is gradually changing as people’s expectations change and it’s fantastic that businesses are working with their HR teams to create programmes and support structures that go beyond the perks we found had been introduced in last year’s report.”
In terms of working practices, most organisations (62%) expressed positive attitudes towards remote working. Additionally, the research discovered overwhelming support for a four-day working week, with 64% supporting the pattern.
Ward added: “This reflects a significant shift in the employee-employer relationship. Whereas 2022 saw employees in an unusual position of power as firms battled for talent, 2023 is seeing a reversal of this dynamic. This puts employers on a collision course with their staff.
“The job buoyancy of the last two years means employees expect more money and a better work-life balance. But the downturn in the job market makes it harder for those expectations to match up to the reality.”