The Chancellor of the Exchequer yesterday announced the Budget to Parliament. Mercer has provided some initial reactions and responses to key points highlighted in the 2021 statement.
Investment in skills
David Wreford, Partner at Mercer said: “It is fantastic to see the Government launch their Help to Grow programme to help build management and digital skills in small-medium enterprises. The race is on for all of us to stay up-to-date and relevant. We believe that responsibility for upskilling, reskilling and redeploying to new roles should be shared between employers and employees. Emphasis should be on learning on-the-job and career development, with the organisation providing transparency around the opportunities available and a supportive infrastructure that makes professional development easier to achieve.”
Furlough and employment
Commenting on the Governments’ announcement on employment Mr Wreford said: “Employers will welcome the announcement to extend the job retention scheme, and the Chancellor’s stated commitment to make the protection of jobs his “number one priority”. The scheme is acknowledged as having made a massive impact on reducing job losses with unemployment rising from 4% in March to 5.1% in December and expected to peak at 6.9%, rather than 11.9%. Job losses typically hit the most disadvantaged, those in low-paid work, those less experienced and those living in less prosperous areas, and we need to ensure that the pandemic doesn’t leave people and communities behind.
“Organisations that relied on furlough support are under investor pressure to consider that when determining executive bonus payments. We also expect to see that the pandemic will lead to some further fragmentation of the workforce as more people turn their backs on the ‘security of employment’. Inevitably this will require companies to rethink how they structure their workforce from an eco-system of employees and other contingent workers, and how they build employment propositions that blend the appeal of employment and self-employment.”
National Living Wage
In relation to the statements in the Budget on the National Living Wage, Mr Wreford said “Whilst the Chancellor announced an increase to the National Living Wage, the increase of +2.2% broadly equates to broader wage movement. The issue of ‘decent’ low pay also referred to as the ‘living wage’ has been moving up company agendas, as they adopt more responsible practices towards their employees and their supply chains.
Whilst this may represent an additional financial burden for organisations at this difficult time, when employment security is more precarious, we welcome the commitment to raise the standards of living of employees and all those who rely on them. The benefits are clear. Fairer practices lead to stronger business that can expect greater loyalty from their customers, suppliers, investors and employees. And the reverse is true. Organisations that seek to pervert responsible practices can expect to be called out for irresponsible practices.”
Business sustainability and ESG
“The Chancellor highlighted a “commitment to green growth” and other sustainability initiatives,” said Mr Wreford. “These reflect an increasing emphasis from business on sustainability issues, recognising the leadership and employee implications. At a leadership level, UK organisations are now targeting executives, often HR, to lead their green initiatives and linking this to their incentives. France and Germany already require listed companies to pay executives partly on the basis of ESG and use of these measures for executives in UK companies has increased in 2021.
“From 2021 most listed commercial organisations, UK PRA-regulated financial services organisations and occupational pension schemes that are regulated by the DWP will be expected to comply with new climate disclosure rules. Sustainable organisations are also more likely to treat their employees responsibly and with empathy. The pandemic has shone a light on responsible employment practices including wellbeing, DE&I, fair wages, job and health protection, and responsible pension investments.”