LONDON — Britain’s financial sector is being urged to do more to help workers struggling with the cost-of-living crisis, despite a slew of top banking names providing one-off payments to low earners.
Nationwide announced on Aug. 15 a payment to more than 11,000 employees to help with the increasing cost of living. The payment is aimed at those earning £35,000 ($42,300) or less a year, which is 61% of the workforce.
“The months ahead will be worrying for many people and we’re always considering new ways to help our members. But rising prices affect our colleagues too and that’s why we’re providing this additional support,” Debbie Crosbie, CEO at Nationwide Building Society, said in a press release.
The world’s largest building society — an organization which lends capital for the building of property — is the latest in a string of U.K.-based financial institutions offering aid to employees.
The move is a logical one, as the banking industry is reaping the rewards of the higher inflation rate that is strangling so many others.
As inflation — the rate at which prices increase over time — increases, so do interest rates, bringing in more income for banks. The Bank of England launched its biggest interest rate hike in 27 years on Aug. 4, the sixth rate hike since Dec. 16, 2021.
The U.K.’s biggest banks have made billions of pounds as a result of the Bank of England’s latest rate rise, with Barclays, HSBC, NatWest, Lloyds and Santander holding as much as £673.5 billion at central banks by the end of June, according to analysis by British newspaper The Times.
Workers’ rights group Unite the Union has been lobbying for organizations, including banks, to offer financial support to employees.
“We wanted to re-open the pay negotiations that had been closed,” Unite National Officer Dominic Hook told CNBC.
“Typically what happens is the pay year starts in March or April so we’ll have pay negotiations often towards the end of the previous year … So what we were saying is, we agreed it back last year but we’ve now got a cost-of-living crisis so we want to re-open negotiations,” he said.
Some banks agreed to negotiate salaries, while others opted for one-off payments.
Wealth inequality
Lloyds announced a one-off £1,000 payment to 99.5% of its colleagues in June, excluding senior management and executives, while TSB offered the same amount to the 4,500 members of staff earning £35,000 or less.
Virgin Money offered £1,000 to employees earning £50,000 or less in August, and HSBC granted its lowest paid workers a £1,500 cost-of-living payment in the same month.
While these support measures may be welcome boosts for employees, they may not go far enough, said Ruth Thomas, chief product evangelist at compensation software and employee management company Payscale.
“We are seeing practice amongst some employers to pay one-off bonuses to support workers through the cost of living crisis. Whilst these may give temporary relief to lower-earning employees, they…
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