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One in five (21%) employers have, or are considering, implementing special pay policies for essential employees, according to research by insurance organisation Aon.

The survey of 1,889 organisations worldwide published 23 April 2020, also found that one-quarter (25%) of businesses in Europe have introduced special pay for front-line employees, half (52%) of these organisations are within the manufacturing industry, 36% within logistics and 35% operational employers.

The survey also found that over one in ten (13%) of the UK market has not been impacted by the Coronavirus pandemic and continues to hire new candidates as normal, with 2% of organisations, consisting mostly of European businesses, having accelerated hiring to meet the demand for essential products.

Businesses have adapted to virtual processes quickly, with just over three-quarters (76%) of UK businesses implementing virtual interview and recruitment processes and six in ten (60%) of employers in Europe extending one-off payments for equipment purchases to support remote working.

However, one-third (35%) of UK employers have already stopped or are delaying hiring new staff, with one-half (50%) of the organisations remaining cautious and focused purely on hiring for selective roles or replacing key positions.

With uncertainty due to the pandemic, two-thirds (66%) of respondents have yet to make changes to health and benefits plans and over four-fifths (84%) having not made any changes to retirement plans.

The most impacted industries by the Covid-19 (Coronavirus) pandemic so far has been energy, retail and manufacturing. Aon found that an estimated 60 to 70% of UK organisations have already downsized or are considering doing so, with two-fifths (44%) in the retail industry and just under one-third (30%) in the manufacturing industry.

6% of organisations in Europe and 8% in the UK, are also having to make employees redundant. While 11% of Europe organisations and 13% of UK businesses have furloughed employees.

Sean Carney, partner at Aon’s Rewards Solutions, said: “Between our first and second pulse surveys, a span of three weeks, the number of companies postponing and/or cancelling salary increases doubled to about 40% of the organisations in Europe. In the UK market, 25% of companies surveyed have already frozen or cancelled salary increases for 2020 for selected roles or for all employees, while 18% have postponed them until further notice. Among UK companies surveyed, 57% have not made changes to their compensation programmes at this time.

“So far we have seen changes focused on fixed pay either through cancelling or delaying increases or via direct salary reductions. In contrast, we observe more of a wait-and-see approach adopted by companies regarding wider considerations for cost reduction. These could emerge through adjustments to variable pay – including bonus payments – as well as in other areas, notably retirement benefits. It will be interesting to see how this situation develops over the next few weeks.”

“For the UK, about a third of organisations have so far focused on non-financial aspects and encouraged employees to take previously accrued paid time off or unpaid leave. Still, 66% have yet to make changes to health and benefits plans and 84% of the organisations have yet to make changes to retirement plans.

“On the other hand, about a quarter of organisations have already been encouraging employees to take previously accrued holiday – however limited the possibilities may currently be.”

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