Economic pain is so bad right now that more companies are handing out up to $2,800 in inflation bonuses to keep their lowest-paid workers afloat


A growing number of firms globally are handing out one-off bonuses of up to $2,800 to keep lower-paid workers afloat as inflation outstrips pay and pushes prices higher.

Retailer Lowe's said in August it would hand out a collective $55 million in bonuses to help hourly employees. Rising gas prices prompted other American firms to hand out bonuses and gift cards earlier in the summer, the Washington Post reported.

British firms have also started handing out one-off payments as news media and lawmakers refer to an impending "cost-of-living crisis" this winter, fueled by rising inflation, a weak pound, and an energy price rise. 

British telco Virgin Media O2 announced on October 6 that it would hand out £1,400 ($1,152) to workers earning under £35,000 ($39,496) in basic pay.

A spokesperson said the firm was "supporting people who need it most."

And UK banks such as NationwideBarclays, HSBC, and Monzo are all offering one-off bonuses to staff. Insurer Lloyd's of London said in September it would pay staff who earn less than £75,000 ($85,000) a one-off bonus of up to £2,500 ($2,800).

Monzo announced this month it would offer £1,000 ($1,109) payments to staff who make under £40,000  ($45,327) — although it hasn't specified how many of its 2,500 employees will be receiving this bonus. 

"We're constantly reviewing the situation to make sure that we're doing what we can," Monzo's global CEO, TS Anil told LinkedIn.

In France last month, luxury retailer LVMH said 27,000 of its staff would qualify for a bonus ranging between 1,000-1,500 euros ($973.50-$1,460).

Rising inflation is reducing the "purchasing power of wages", especially in Europe and the UK where wage growth is meager compared to the US, Antonio Fatas, professor of economics at INSEAD, told Insider.

One-off payments are cheaper than permanently raising annual pay, he added.

"Companies prefer to give you a bonus or a special payment rather than raising your wages because raising your wages is going to be forever," Fatas said. "There's a lot of uncertainty. So there is the possibility that inflation drops very partially the next month, and there's a possibility of a crisis. So companies are being a little bit conservative and careful, and if they can get away with a one-time payment, they will try."

Although firms handing out cash is a significant and unusual move, workers' rights' representatives say it isn't enough.

Companies offering bonuses "can and must do better for their workers," according to Frances O'Grady, secretary at the UK's Trade Union Congress, a federation of trade unions.

"A bonus and extra days off can be a part of the pay and conditions that workers and their unions negotiate with employers, but employers should not use them as a ruse to bake in long-term cuts in the value of pay," she said. 

"Companies have a duty to share their wealth fairly with the workers who create it for them. Giving staff a genuine cost-of-living pay rise as a minimum should be a top priority year-on-year."

Virgin Media O2's spokesperson said the firm had support from its employee groups, forums, and unions for its cost-of-living package.

The ongoing crisis may fuel a return of union power, Fatas said, as they weigh in on the "wage negotiation equation," between companies and workers.

Post a Comment

Previous Post Next Post