EMA is warning against a knee jerk reaction to the current economic and political climate after an annual survey completed by housing associations revealed that the number making pay awards has dropped from 97% to 60%.
The 2016 Total Reward Survey, commissioned by EMA, shows that while the private sector has recorded average increases of 3.5% in Quarter 2, one third of housing associations indicated they wouldn’t be giving a pay increase in 2016, with 60% awarding between 0.5% and 2%. This represents a marked reduction on 2015 levels when 53% said they offered between 1.5%-2% and 25% awarded an increase of more than 2%.
Other changes made as a direct result of the 1% rent reduction include 2.9% of associations reducing salaries, 41% making staff redundant, 13% amending staff terms and conditions and 16% reducing development programmes.
In addition, the number of employees receiving a car benefit have decreased by 4% and healthcare benefits have reduced by an average of 12% on 2015 levels for all except Care employees.
There has also been a stark drop in the percentage of housing associations offering 6 month full/6 month half pay schemes for sickness (down from 70% in 2015 to 64% in 2016), subsidising membership fees for health and sports clubs (reducing from 65% in 2015 to 48% in 2016), providing Employee Assistance Programmes (down to 82% this year from 87% in 2015) and offering final salary pensions (offered to 12% of new starters in 2016 compared to 16% in 2016).
Ian Robertson, Executive Director at EMA, comments: “As housing associations face increasing pressure to become more commercial, in what’s become an increasingly difficult economic landscape, the drive to reduce expenditure across all parts of the business is a natural one.
“Whilst some measures, such as reductions in final salary pensions and changes to sick pay benefits are consistent with those being made across the private sector, we would urge housing associations to consider not only the short term financial gains of reducing reward associated costs, but their longer term prosperity.
“If they lose the ability to compete with the private sector to attract and retain the best employees, then they also risk undermining the future success of their organisation and the sector as a whole.”
One key factor currently still facilitating this much needed competition with private sector packages is the provision of bonuses/performance related pay. Since 2015 there has been an increase in both the provision and level of bonuses received. The percentage of Directors receiving a bonus has increased by 2.5%, rising to a 5.5% increase for Senior Managers, a 8% increase for manual employees and a 10.5% increase for employees in sales, with typical bonus payments up to an average of 12.5% of salary, from 7.5% in 2015.
Other valuable employee benefits such as flexible working hours are also being maintained. Approximately 70% of staff are now able to work under flexitime schemes, including part-time working which is offered by 95.9% of associations and job sharing which is operated by 82.2% of organisations. The ability to accrue time off is also enjoyed by 91% of office staff (up 10% on 2015 levels), whilst home working is contractually available from 13.7% of associations and from 92% informally.
But with the private sector increasingly adapting to the demand from employees for more flexible working arrangements this point of difference may soon become a thing of the past.
Ian concludes: “Historically, public sectors such as social housing have always had the upper hand when it came to flexible working and as such were able to attract many talented staff who for whatever reason didn’t want the rigidity of full time, office based roles.
“But with many private sector companies now recognising the benefits of flexible working housing associations need to think carefully about how they are going to restructure their rewards policy to support recruitment and retention moving forward.”
The survey was completed by 94 housing associations in July 2016 managing a combined total of 987,000 homes.
Ian Robertson, Executive Director at EMA