MAGGIE PAGANO: Early signs suggest we are seeing a structural reversal in employer-to-employee power – also high time
- In the UK, employers in the transport, food and manufacturing industries are digging deeper into their pockets
- Tesco and Amazon pay £1,000 bonuses for drivers
- Salaries for construction workers in the UK have risen 6.7 percent in the past five months
- Such wage increases have not been seen in decades, not since the 1960s
The latest beep to make working life more attractive comes from Citigroup, which has ordered its junior bankers working across Europe to take two weeks off by the end of September on what it calls a ‘completely disconnected’ vacation.
Citigroup has also promised staff a work-free “disconnect” weekend every month and one day a week without video conferencing to prevent burnout. They can also buy five extra vacation days.
The American giant isn’t the only international bank looking for ways to retain staff or attract recruits in a fierce war for talent. Employers are looking for better ways to protect workers who have demonstrated how well they performed WFH during the pandemic.
Up: Employers around the world and across the industry are raising salaries to attract staff
Goldman Sachs is offering graduates starter packs of £100,000 in the UK. The magic circle law firms pay equally juicy packages for newly qualified lawyers, while the signup bonuses are back.
It’s not just the high-flying financiers who are more confident in their value. Employers around the world and across the industry are raising salaries to attract staff to meet burning consumer demand and to counter labor shortages and supply chain disruptions caused by the lockdowns.
McDdonald’s, Wayfair, Walmart and Starbucks are just some of the US companies that have recently increased their wages and now pay a minimum hourly rate of at least $17 (£12.30). CostCo now pays nearly half of its staff an hourly rate of $25, while Bank of America has promised an hourly rate of at least $25 for all staff by 2025. These shortages are also not limited to the West. With the demand for Chinese goods soaring, factory owners are struggling to hire workers.
In the UK, employers in the transport, food and manufacturing industries are also digging deeper into their pockets: Tesco and Amazon are paying £1,000 bonuses to drivers, while even Cornish restaurants are luring bar staff with golden hellos.
Construction worker salaries in the UK have risen 6.7 percent in the past five months. Wages for driving jobs are up 5.7 percent, while manufacturing jobs are up 4.8 percent.
Such wage increases have not been seen in decades, not since the 1960s.
For the past four decades, employers have been in charge: migration, globalization and deregulation have led to an endless supply of cheap – and compliant – workers. By far the biggest reason for this was migration: over the past 20 years, the number of non-UK nationals working in the UK has risen from 1.06 million to 3.75 million before Brexit.
As economist Doug McWilliams points out, what is less well known is that since 1985 the number of over-50s in the workplace has increased by 3.8 million.
But the pandemic may have stopped this: About one-fifth of people over 66 have become unemployed since Covid struck, compounding the labor shortages we are now witnessing.
Even our most thoughtful economists aren’t sure what lies behind such a mismatch between labor supply and demand, and what effect it will have on inflation or productivity and corporate profitability.
Also, no one knows for sure why the unemployed don’t want to work.
Some employees are too afraid of the virus, others can live too comfortably on their leave or can survive without extra income.
It is often difficult to detect seismic shifts in economic history. Yet these early signs suggest that we are seeing a structural shift in employer-to-employee power. It’s also time.