Rolls-Royce is to give £2,000 to around three-quarters of its UK workforce, making it the latest major British employer to try to help staff deal with rising costs with special pay awards.
The British aerospace and defence company, which is one of the largest manufacturers in the UK, told staff on Monday it would be giving the financial help to 14,000 shop floor workers and junior managers to help them through the “exceptional economic crisis”.
It also offered a 4 per cent pay increase to 11,000 workers ― backdated to March — while junior managers have been offered a bonus.
Under the proposals, the £2,000 payments will be made in August, if the offer is accepted by Unite union members.
It follows a move by other UK employers to help staff, as the country faces soaring energy and fuel costs.
Earlier this month, Lloyds Bank announced that 64,000 employees would receive a £1,000 bonus.
Warren East, Rolls-Royce chief executive, told staff the company had made the move as a “simple wage increase” is “just not affordable and, in fact it would be irresponsible”.
“We are living through exceptional times, with economic uncertainty largely driven by the continuing impact of the global pandemic and more recently the war in Ukraine,” he said.
“All of this is impacting each of us at home, at work and in our pockets.”
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The move will cost the company about £45 million and ii says it is the “highest annual pay rise for at least a decade”.
The company added it was the first time it was offering a “bonus” that was linked to the economic climate and not performance.
The proposals come after UK Prime Minister Boris Johnson warned that a sharp increase in wages would risk fuelling further price rises.
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He said that increasing pay to match inflation risked a wage-price spiral.
Calling for caution in the face of rapidly rising inflation, Mr Johnson said the government would “fan the flames of further price increases” if it tried to spend its way out of the cost-of-living crisis.
“We can’t fix the increase in the cost of living just by increasing wages to match the surge in prices,” he said.
“I think it’s naturally a good thing for wages to go up as skills and productivity increase — that’s what we want to see.
“But when a country faces an inflationary problem, you can’t just pay more and spend more, you have to find ways of tackling the underlying causes of inflation.
“If wages continue to chase the increase in prices, then we risk a wage-price spiral such as this country experienced in the 1970s.”
Energy industry regulators have already warned that household energy bills in Britain are set to surge by another 40 per cent in October.