After Years Of Wage Falls SME Employees Will See Their Take-Home Pay Rise

Wages for staff at SMEs are set to rise, according to new data released by the Institute of Directors (IoD).

The organisation asked its members what their plans are in regards to pay and some 36 per cent said they intend to lift their wages in line with inflation, while a further 29 per cent want to go further and give a pay rise over the base rate, which currently sits at 1.9 per cent.

For years, workers in nearly all sectors have faced pay freezes or cuts because of the UK's flagging economy - but with performance improving in recent months, many companies are choosing to offer their employees greater remuneration as a reward for increased profits.

James Sproule, chief economist at the IoD, told the Telegraph: "For many people, the recovery is something they hear a lot about but, as yet, have not really felt in their wallets.

"For those employed in the private sector questioning when they will start to feel the benefits of growth, the answer is very, very soon."

Government critics, including the opposition Labour party, have criticised the coalition in recent years for failing to pass on the benefits of the improving economy to normal workers - branding the situation as a "cost-of-living crisis".

However, Liberal Democrat and Conservative politicians argue that almost all western nations have seen sustained falls in income levels over recent years, but that growth would return remuneration levels to their standard rates in the coming months.

Recent drops in earnings among UK private sector employees have come at the same time as a sharp increase in executive pay for senior managers at multinational companies.

July saw a rare shareholder revolt at a proposed pay package for Burberry chief executive Christopher Bailey rejected.

The new fashion house boss was to be offered remuneration in excess of £10 million per year, but it is not clear if this will be the case moving forward.

Expert Opinion

It is positive to see this survey suggest that many SMEs are looking to reward employees for their work during what has been a difficult time for many businesses. Greater remuneration or the offering of new staff benefits is an important tool in terms of boosting or maintaining staff motivation, as well as in retaining highly-skilled and valuable members of the team. <br/> <br/>"While it is fantastic that many growing businesses feel in a position to provide such increases, it is important for them to consider the legal aspects of making such a move. Many small businesses do not have the capacity to operate their own HR resource for instance, so those looking to take this step should consider seeking advice from employment law specialists to ensure that the steps they take are compliant with key regulations." Fergal Dowling - Partner