A pay rise? Don't be so old fashioned

Is there any room for the paternalism in corporate life? There was a time when employers sought out opportunities to help workers with the nuts-and-bolts welfare stuff that most people take for granted. Employers had to, partly, because Government legislation obliged them to comply with safety, health, and personal financial issues. Trade unions also pressed boards to do the decent thing. Considerate employers may have believed that good corporate behaviour would stimulate productivity and encourage loyalty. It would be nice to think that companies took care of employees because it was the simply the right thing to do.

Employer paternalism was diluted when final salary pension schemes got ditched. Now it seems that many are quietly forgetting about annual pay increases too, even those designed only to update pay in line with the cost of living. Check this out from the Chartered Institute of Personnel and Development. It says that nearly half of employers now fail to give workers an automatic annual payrise. What next? Will construction companies excuse themselves from accidents at work because the cost of doing anything but comply with the letter of the law knocks short-term profitability?

I hope not. Primarily because I do not want to see people hurt. But shareholders should assume that good corporate citizens are ones that make the biggest, most sustainable profits in the longer term. If companies abandon their responsibilities, they should not be surprised if trade unionism enjoys a resurgence in popularity. An awful lot of goodwill could be lost when workers wake up to the fact that companies have stopped caring for them. An awful lot more could go if trade unions get put back in a seat of influence.

P.S. If you want to know how much you lose not getting inflation linked pay rises, visit this thisismoney site to use its handy calculator. You may not miss one annual inflation rise... but if you missed the last 10 in succession you would be 25 per cent poorer.