HR Policy Global hosted a webinar to discuss the challenges multinational employers are facing due to widespread inflation, and how to assist employees around the world, especially those in Europe, with diminished purchasing power. When tackling economic challenges, tight labor markets, and pressures from employees and unions, it is critical to keep effective internal communications across countries and functions, to focus on specific local approaches under a global framework, and to implement solutions that won’t have a long-term undesirable impact.
Building guiding principles on addressing global inflation: Mr. Cramer started with a Mercer report on inflation and impact on pay and rewards, which indicated that the majority of surveyed companies have not made immediate compensation changes to their global workforce but feel there will be significantly increased salary demands across all roles and skills going into next year. Additionally, 40% of surveyed companies said they will factor inflation into their 2023 merit budgets. Regionally, Asia has been least impacted by inflation while workers in Europe and UK have suffered the most.
Based on that context, Mr. Cramer encouraged global employers to build guiding principles with considerations of market, competitiveness, affordability, and consistency, along with accessing local compensation market positioning and partnering with local teams. He emphasized the importance of employee education on total rewards, especially for line managers who directly address questions from employees.
Inflation not likely to continue beyond 2024: Mr. Lausberg shared that the current rate of inflation is not likely to last beyond 2024. Despite similarities with 1970s stagflation, the situation should normalize, particularly if Europe can gain energy independence from autocracies by diversifying resources. He also pointed out that while Asia Pacific is the least affected region, Latin America continues to deal with its own institutional problems in addition to economic challenges.
Limited industrial action expected: Mr. Hayes noted his belief that most unions in Europe and the UK are relatively responsible on this issue. They recognize that any unreasonable wage increase will put their members and jobs at risk and are unlikely to post major industrial actions that fundamentally harm businesses. Therefore, he suggested employers work with their unions and workers representatives to avoid any pay or merit actions that could cause long-term unfavored impact.
Outlook: As inflation continues to impact employees’ lives, employers are instituting creative and flexible solutions to help their workforce in ways beyond compensation. HR Policy Global will monitor this issue and work with our members on challenges they face.