Tuesday, January 21, 2020

3.3% pay increase needed to keep in line with living wage

December 23, 2019 by  
Filed under News & Business

Farm workers in England need a 3.3% pay rise in 2019/20 to keep in line with above-inflation increases in the National Living Wage and agricultural wage rates in the rest of the UK.

The recommendation by Strutt & Parker is aimed at employers in England, who are no longer covered by rates set down by the Agricultural Wages Board. Minimum wage rates are still set by official pay review bodies for farmworkers in Northern Ireland, Scotland and Wales.

Each year, Strutt & Parker seeks to come up with guidance for its clients based on analysis of key market indicators. This includes what has been agreed in other parts of the UK, the rate of inflation and the outcome of public sector pay awards.

George Chichester, director in the farming department of Strutt & Parker, said: “This is the second year in a row where, after much deliberation, we have recommended a pay increase in excess of the rate of inflation.”

Higher than expected

Mr Chichester acknowledged that the recommended increase may be higher than many employers expected. But he said it reflected the fact that the National Living Wage rose by 4.9% in April 2019 to £8.21/hr.

A standard agricultural worker (Grade 2 Equivalent) over 25-years-old must not be paid less than this hourly rate, said Mr Chichester.

Pay bodies in Wales, Northern Ireland and Scotland agreed pay increases for Craftsman Grade workers (Grade 4 Equivalent) of between 2.2% and 4.8%, with effect from 1 April 2019. The highest rate agreed was in Scotland where the minimum craftsman rate is £9.46/hr. “Taking both of these points into consideration, we are suggesting that employers in England consider a 3.3% increase to the craftsman rate to bring it into line with wage rates in Scotland,” said Mr Chichester.

“While employers may feel this is challenging, at a time when profitability is being squeezed, it feels unavoidable if the premium for Craftsman Grade workers is not to be eroded still further,” he explained.

“Employers should also be aware that given the National Living Wage is expected to rise again in April 2020 to £8.67/hr, wage levels for standard and basic workers are likely to need to increase again in the spring.”

When reviewing wages, employers may want to take into consideration other non-pay benefits which are part of a package, said Mr Chichester.These include accommodation and opportunities for career progression.

“While it may be appropriate for lower grade workers to receive an above-inflationary award, this may not be appropriate for employees who are already on attractive packages,” he said.

Despite wage increases, many farm workers have seen little increase – or even a decline – in their take-home pay in recent years. This is due to increases in employees’ pension contributions through auto-enrolment, which rose to 5% in April 2019.

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