Five employee benefit trends for 2023

As we emerge from a global pandemic, we are confronted by inflationary pressures, geopolitical tensions, and the ‘Great Resignation’.

The cost-of-living crisis has employers looking for ways to help employees spread their salaries further than ever before. Budgets are tight, and employers need sensible, practical investments and solutions.

In better news though, 2022 has seen us welcome back a workforce committed to finding true value and purpose in their careers. While this brings HR and People teams new challenges, it also offers new opportunities. Sustainability and Environmental, Social and Governance (ESG) values are essential to attracting and retaining the next generation of talent.

To help you navigate this new territory, we’ve identified key employee benefit trends as we head towards 2023. Forewarned is forearmed, and by addressing issues the new year might bring, you can support your long-term sustainability, reduce attrition risk, and mitigate those hidden, budget-draining factors like presenteeism and absenteeism.

1. The Great Resignation will continue

The Great Resignation has already seen 800,000 job-to-job resignations nationwide, and it will continue to turn recruitment on its head.

The job market has been competitive and candidate-led. Increased needs for learning and development (L&D) and flexible working have already overtaken salary as key drivers for changing roles. (Although with financial forecasts looking grim, benefits that help your people make the most of every penny of their purchasing power will be welcomed.)

16% of 18–24-year-olds left their last employer because they didn’t share their values. So, to attract top talent in 2023, employers must look to align their values with their workforce and take reward and recognition to the next level to complement traditional remuneration – both to meet their workforce’s ethical needs and to help them weather the cost of living storm.

2. Financial wellbeing will be a priority

Financial education has a big positive impact on overall mental, physical, and social wellbeing. According to The Money and Pensions Service, 8 in 10 UK employees take their money worries to work. So with an impending recession, 2023 is the year for employers to build their workforce’s financial resilience.

3. Voluntary discounts and salary sacrifice will be part of the answer

Money makes the world go round, and as there doesn’t seem to be enough these days, 2023 will likely see enhanced take-up of discount platforms. By offering unique discounts that significantly reduce the cost of key living expenses, they are a powerful, low-cost way to support employees’ everyday costs – particularly when combined with salary sacrifice schemes.

Salary sacrifice gives your employees the opportunity to exchange a part of their salary for benefits such as electric vehicles, technology and cycles. The advantage is they save on tax, national insurance or both. Employers can also make Class 1a National Insurance Savings which presents a significant 13.8% saving based on the changes to the rates on November 6th, 2022.

4. Cash advances & savings plans will be another

It seems money worries will dominate 2023. With 1 in 5 employees saying their employer is not doing enough about their financial wellbeing, and the rise of a buy now, pay later culture, the prediction is that the global spend for BNPL will reach nearly $4 trillion by 2030. That’s £500 of liability for every person on the planet!

During the Covid pandemic, it was reported that nearly 40% of people had to access emergency savings but fast forward two years and employees’ funds are depleted – a CIPD report confirms that over a third of workers surveyed would be financially unable to manage a £300 emergency.

Businesses can assist their workforce by making provisions for cash advances, and it’s likely we will see a resurgence of Christmas saving clubs and travel accounts.

5. Support for mental wellbeing will need to rise

With all of 2023’s impending stress, and the NHS clogged up with an 18-month backlog of cases, mental health needs will be at the centre of many employees’ concerns.

Mixed anxiety and depression affects 8% of the population, while generalised anxiety disorder (GAD) impacts the lives of 6%. Add to that post-traumatic stress disorder (4%), and depression: (3%) and you’ll see why employers are struggling to retain top talent whose needs are not met. Holistic emotional and psychological support will be vital for retention.

A detailed look into 2023 employee benefit trends

The five trends above are just some of the developments we see ahead. We cover them fully in our Employee Benefit Trends Report 2023. Download your copy today, so your organisation can prepare for what’s coming down the pipeline.