New research by the Work Foundation finds that while businesses increasingly recognise employee benefits as vital in the global race for talent, many are failing to maximise their value for low earners amongst their workforce.
Fundamentals such as uniform, equipment, training required to do the job, pension and insurance schemes and flexibility should automatically be given to employees in any modern workplace to ease financial burdens on families and to help them balance work and family life, researchers say. However, an in-depth study working with businesses and employees from the retail and social care sector reveals that despite the broad variety of employee benefits available, in reality, low earners prefer and use a very limited number.
In 2015/16, 13.9 million people were living in poverty in the UK - 22% of the population - and more than half were in working families. With such high levels of in-work poverty, attention has shifted to focus on the quality of work and how that might be improved, which led to the report being commissioned by the Joseph Rowntree Foundation.
Researchers assessed the market and identified more than 50 different types of employee benefits in the UK, varying from those that offer increased job security, flexibility or discounts on household essentials, to lifestyle perks such as sporting or recreational facilities. However, the research found benefits relating to food and leisure, travel, childcare and housing and utilities were most valued by low earners, as well as those that provide financial education and support.
Heather Carey, Deputy Director of the Work Foundation co-authored the report. She said: "Improving wages will always be vital to tackling in-work poverty, but there are other steps that businesses can take to improve working practices and lend greater support to low-earners. Employee benefits can be extremely valuable - particularly schemes that help to mitigate living costs. But despite rapid expansion of the employee benefits market, our research finds that many employers are failing to maximise their value for low earners which is bad for employees, and bad for business.
"It's so important that employers recognise the business benefits these can bring - the firms embracing fringe benefits are reaping the rewards of better employee engagement, productivity and performance - as well as having happier staff."
The report, Improving Fringe Benefit Schemes for Low-earners, written by the Work Foundation and commissioned by the Joseph Rowntree Foundation, points employers to a 'framework of good practice' which outlines 7 steps to take to maximise the value of employee benefit schemes. Experts also say there is a need for better incentives and support to enable businesses to embed this framework, suggesting new resources, business advice services, mentoring, professional membership organisations or networks could be made available to help businesses progress.
Louise Woodruff, Policy and Partnerships Manager at the Joseph Rowntree Foundation, said: "It's not right that 3.7 million workers live in poverty. Businesses can help right the wrong of in-work poverty by making sure their fringe benefits schemes help with the cost of living for their lowest paid employees. It's great that employers invest in extra support for their employees but by thinking much more about design, uptake and digital skills they can maximise the potential for these schemes to help their lowest earning colleagues."
Heather Carey continues: "The UK needs to raise the bar in terms of job quality for low paid roles and establish a new minimum standard of benefits that employers should offer. This should be supported by new incentives that recognise and reward businesses that offer 'good work', including greater transparency in financial reporting and stronger 'kite-marking' to identify true responsible business."
Notes for reporters
*The 7 point 'framework of good practice' outlined in the report:
- Securing commitment among business leaders to support the needs of low-earners, using research, stories and case studies to illuminate the challenges they face, and the impact employee benefits can have on their living standards.
- Building a business case that fully reflects the impact of employee benefits, including acknowledging tangible and intangible benefits and recognising the role employee benefits can play in supporting organisational priorities and challenges.
- Recognising the distinct needs and preferences of low-earners, and the diversity of the group, in the design, implementation and evaluation of fringe benefit schemes.
- Providing additional support to inform choice, enable access and demonstrate value, striking the right balance between offering flexibility, while also providing support to enable take-up of those benefits of greatest value.
- Working collaboratively with third-party suppliers to tailor off-the-shelf products so that they are more closely aligned to the needs and challenges of low-earners.
- Promoting benefits in a way that reaches and resonates with low-earners, recognising and helping to tackle digital exclusion and a lack of digital skills among some of this group.
- Monitoring and measuring take-up and impact, to assess how successfully they are meeting their objectives, to refine the approach to improve impact, and to demonstrate their value in driving business performance and supporting low-earners.