The combined impact of geopolitical events, volatile inflation and the cost of living crisis has demanded immediate attention from employers tp combat increasing costs, with potential to detract from efforts to address inequality. Pay differentials and tax treatment of earnings continue to be scrutinised by the media and wider society. An increasingly politicised environment has also led to cultural divisions becoming more prominent and spilling over into the world of work.
One year on, much of the optimism has dissipated. The damage inflicted by extreme weather and increasing temperatures impacts the poor more severely, and “building back better” post-pandemic has given way to mitigating the impact of rising energy prices and a cost of living crisis. Employers’ focus has shifted from addressing inequalities and divisions to managing exponential increases in their costs, pressures to increase workers’ pay, and supply chain disruption.
Nonetheless, the politics of pay differentials continue to shift, with all shades of the media in the UK regularly featuring the inequalities arising from the tax treatment of earnings. Despite this, Liz Truss’s short-lived government in the UK came into power with a different stance, proposing tax cuts which primarily benefitted the wealthy. This approach to taxation reform proved very unpopular and seems to run counter to popular opinion. It was quickly reversed. The proportion of the British public who consider that the government should redistribute incomefrom the better-off to those who are less well-off has increased gradually over recent years. Now 22% more support this than oppose it.
Shareholders have continued to show concern for both excessive remuneration and the pay of the less highly paid on both sides of the Atlantic. The High Pay Centre had reported that the pandemic caused pay ratios between the top and bottom paid in companies to fall, but new analysis indicates that ratios are now increasing to new highs.
The cost of living crisis has also highlighted inequality and division across society and the workplace and low pay remains a critical issue for many. The real living wage in the UK set by the Living Wage Foundation (which many accredited employers commit to paying) now stands at £10.90 per hour (£11.95 in London), an increase of 10.1% on 2021 and the largest ever rise reflecting the cost of living rise. It now stands at £1.40 per hour more than the National Living Wage which must by law be paid to the over 23 year olds. In the Autumn Statement the government announced an increase in the National Living Wage (effectively the minimum age payable by law) from April 2023 to £10.40 per hour, an increase of 9.7%.
In 2022, almost half of respondents to a survey by USDAW, the UK’s fifth largest trade union, reported missing meals to pay everyday bills - this was double the level seen just 12 months earlier. Furthermore, around 7 in 10 are now relying on unsecured borrowing to pay everyday bills, a significant increase from around 4 in 10 a year ago.
In the current economic climate, for many people in the working population, considerations such as good work, flexibility, autonomy, a sense of purpose or belonging are unachievable luxuries where making ends meet with a degree of dignity is the sole priority. In all likelihood, the divisions in the labour market between those benefiting from new-found flexibilities whose skills are in sharp demand and those unable to benefit from these flexibilities will only increase, fuelling the emerging gap between workforces in different sectors and industries.
The last few years have seen cultural divisions split societies with emerging fractures on both sides of the Atlantic between, on the one hand, the progressive, international and liberal and, on the other hand, the traditional, nationalist and authoritarian. This has been referred to by political scientists as the GAL-TAN divide (Green, Alternative, Liberal)/(Traditional, Authoritarian, Nationalist). Politically these divisions have, to a large extent, replaced economic or class-based divides.
The concentration of progressive, international, liberal attitudes amongst the young (particularly in the UK), and traditional, authoritarian, nationalist attitudes among the old could signal a fundamental shift of attitudes as people adapt to a changing world in the years ahead.
Research on generational differences which examined the causality between these differences and conflicts, concluded that, while generational research helps us to understand ways to manage a diverse workforce, a focus on generational differences oversimplifies the complexities of the issue. Some argue that personality characteristics which do not vary with age are underplayed and others argue that some differences are better explained by life or career stage. Much will depend on the extent to which attitudes change with age or people continue to hold the beliefs they held at a younger age. This Future of Work Hub podcast explores the extent to which attitudes change as people progress through different stages of life.
Nonetheless, these divisions are likely only to get worse in an increasingly politicised environment, generating the potential for more intolerance for the views of the other side. Employers will often have to navigate these divisions. A study for King’s College found that a third (35%) of the public tend towards feeling that people need to be more sensitive in how they talk to people from different backgrounds, up from a quarter (26%) at the end of 2020. This shift in views means the country is now evenly split on whether people are too easily offended (35%) or whether they should be more sensitive (35%). 30% are somewhere in the middle of these two opposing positions.
The reaction in the US to the overturning of Roe v Wade demonstrates a geographical polarisation of views, with many states’ populations heavily weighted on one side or the other of the abortion debate. Employer brand activism has thrust some organisations, particularly in America, into the spotlight and highlighted these tensions (for example, Walmart and Patagonia).
Employers will increasingly be affected by these social tensions. An example today is in relation to gender neutral toilets. On the one hand, certain employers are moving to gender neutral toilets. On the other hand, the government has announced plans for all new public buildings to be required to have separate men’s and women’s toilets.
In the latest British Attitudes Survey, despite increased concern about inequalities in recent years, the British public’s attitude has shifted markedly such that now a majority say that transgender people should not be able to change their sex on their birth certificate whereas only two years ago a significant majority had the contrary view. Navigating these shifting societal and political environments will be a growing area of employer focus in the years ahead.