You may well have heard some coverage recently following the publication of the Joseph Rowntree Foundation report on The Minimum Income Standard (MIS) in the UK.

MIS does not claim to be an official poverty line, as in most cases it is significantly higher than the figures used for the poverty definition. Instead the MIS seeks to isolate the income level people need to receive in order to have a ‘socially acceptable’ standard of living. This is delivered by undertaking research with a number of focus groups from a cross-section of the UK population.

Examples of items included in the assessment include:

• a one week self catering holiday for a family in the UK every year
• pocket money of £5 per week for children
• computer and Internet access for all families

And having read the report in some detail, I think the depth of investigations give this real credibility, and the income standards set do indeed provide an indicative level for what any given family grouping (single person, pensioners, couples with children, and lone parents) in the UK might really need to earn.

Or to borrow directly from the report:

A minimum standard of living in Britain today includes, but is more than just, food, clothes and shelter. It is about having what you need in order to have the opportunities and choices necessary to participate in society.

And despite the research being relatively frugal on luxuries, it still found that the MIS earnings threshold for a couple with 2 children was a combined income of £36,728. And don’t forget, this is just to achieve the MIS, most would like to achieve more, and possibly were doing just that before the long economic downturn hove into view.

Comparing this year’s research with that undertaken in 2008 (the first publication of this report) found that those with dependant children were worse off now than at the earlier date. One of the contributory factors for this was low (or often non-existent) pay increases during this time period.

Now I am not about to criticise those UK employers that have restricted pay reviews, or even decreased pay packets, over the last few years. The scale of the financial crisis has been unprecedented at times, and employers have often taken drastic action just to stay in business. Indeed, if there is a success story of the downturn so far in the UK, it’s the relatively small unemployment lines compared to the scale of the crisis, or indeed some previous recessions. And that in turn has helped the UK economy enormously, as it has avoided the double nightmare of lower tax receipts coupled with greater levels of unemployment benefit payments.

Not withstanding this piece of good news, the MIS report makes it clear that many ordinary employees are really feeling the pinch right now. Yet many employers are still struggling to give any meaningful pay increases.

And that leads the trail back to employee benefits.

I suspect that many employers find themselves with only a nominal amount available to use for pay increases at present.

Let us suppose that the amount available for pay rises this year was the equivalent to say a 0.5% increase across the workforce. After taxes are deducted, this might only be worth a few pounds extra each month to the employee. This has the potential to be met with derision by the employees, and could in fact be worse for employment relations than a pay freeze.

Not only that, but the increase would also carry an increased NI burden for the employer. It’s worth highlighting here that the NI burden is often avoided when providing employee benefits.

So perhaps in this scenario, both the employer and employees may be better served by the amount earmarked for pay increases being instead used to fund employee benefits?

For instance, a low level cash plan for all employees would provide real and tangible financial help with refunds (to a given level) for items such as eye and dental tests. Most cash plans provide other services too, such as a telephone based Employee Assistance Plan (EAP) for free as well. This in turn may help employees in financial hardship with impartial and professional debt counselling advice, which is something of a ‘must have’ in the current financial climate.

And these benefits in turn could also aid the employer. The eye tests and financial help towards resultant prescription glasses could go along way to meeting the employer’s DSE requirements, and possibly help on the duty of care front as well.

The use of the other features of a cash plan (for instance outpatients allowance and regular dental check-ups) may result in a healthier workforce, and likewise the debt counselling advice may result in a less stressed group of employees also. All of which is likely to pay dividends to the employer in both better employment relations, and hopefully lower absenteeism as well.

And there are plenty of other relatively low cost benefits that the employer can consider. Childcare vouchers, bikes to work, discount schemes, additional annual leave or basic levels of Life and Income Protection cover can all be established for relatively low costs and may, if communicated well, be better received than a nominal pay-rise.

And these benefits can, in turn, have a role to play in improving the living standards of your employees.

In conclusion, I think it’s certainly worth exploring the alternatives before any pay-review is decided to achieve the maximum positive impact for both the employer and the employee. Cash is king of course, but the canny employer will consider the full range of options to achieve the best result for all parties.

Best regards

Steve