The job market is complex at the moment with a variety of different factors impacting the sector. Undoubtedly the biggest issue is wage growth squeezed upwards by lack of qualified staff; or simply a pool of potential employees that is dry thanks to high levels of employment.
A recent report in financial newspaper FT.com found that some employers were resorting to counter offers in order to retain staff from moving to better paid employment.
It outlined a survey conducted by the Chartered Institute of Personnel and Development (CIPD), which had found that 40% of UK employers had counter-offered during the past 12 months, either salary matching the new job offer, or going one step further and providing a higher salary.
The survey also found that 44% of employers were finding vacancies hard to fill (more so in the public sector), while 73% planned recruitment over the next three months.
It’s a situation that is typical whether SME, corporate or public sector. So how do you tackle the problem?
Jon Boys, a Senior Labour Market Economist at the CIPD, suggests this:
“While pay is often the most typical focus of a counteroffer, there are other things employers should consider in making roles more attractive, such as flexible working, additional paid holiday, opportunities for career development, or better pension contributions.”
Certainly concentrating on employee benefits is a tactic to encourage staff to stay, as well as to entice in new employees.
Mike Manners, who leads fleet management company CBVC, believes that one crucial tool that employees can use is salary sacrifice for electric cars.
“At a time when the cost of living is squeezing incomes, offering employees a fully expensed electric car – bar the electricity – is a positive way to keep employees engaged in the business and a worthwhile benefit to receive. It’s little wonder that salary sacrifice has become the fastest growing form of vehicle funding during 2023.”
Salary sacrifice, like other benefit schemes, works by sacrificing gross salary for the cost of a car rental. Thanks to a variety of tax breaks, the car is cheaper than if the employee was to lease an electric car personally.
“What’s critical for the employee to understand is that there is no need to pay a deposit, there’s no impact on personal credit lines, and all monthly costs except for electricity are combined into the one monthly package – removed from the salary before deducting tax,” says Mike.
Even allowing for the benefit-in-kind (BIK) that is payable on electric vehicles – equivalent to as little as three or four takeaway coffees a month – salary sacrifice is a highly effective way to offer staff an incentive to stay.
Mike Manners says CBVC provides a portal which is easy for staff to use.
“Employees can browse through which electric cars are available to them and decide how much or how little salary they wish to sacrifice depending on the car. It’s really very simple and easy to use. What’s more, it means the HR department doesn’t need to get involved, saving valuable time.”
There’s little question the UK labour market will remain constricted, even as some of the inflationary pressures begin to fall.
But taking creative steps to provide valuable benefits, such as salary sacrifice for electric cars, are actions employers can take to retain existing employees and attract new staff to vacant positions in a tight labour market.
