Chancellor Reeves’ address signalled tougher economic times ahead, outlining significant welfare and departmental spending cuts – potentially leading to public sector job reductions or a reduction in services that workers rely on. Inflation was also projected to rise, set to peak at 3.8% in July 2025, while the increase in employer NIC rates from 13.8% to 15% is set to come into effect this April.

With one in four UK workers already concerned their salary won’t keep pace with the cost of living, these policy shifts – combined with rising water and energy bills, the end of household support schemes, and an increased stamp duty threshold for first-time buyers – are set to deepen financial worries even further.

The findings - pulled from a survey of over 2,000 working adults – underscore a growing gap between wages and financial security. 

The discontent comes as UK employees reportedly work longer hours than their European counterparts, while almost a third of workers (30%) wish their pay better reflected the work and effort they put into the role.

Despite an increase in National Minimum and Living Wages aiming to boost earnings for low-paid workers, there are still many unhappy with their current pay.

The research went on to reveal that 37% of all workers say they need a pay rise to better manage their financial goals, while 31% say having a lower cost of living would free up more disposable income to save. However, with the NIC rise set to increase financial pressures on businesses, employers may need to carefully evaluate their workforce costs, which could influence wage growth.

“With the economic adjustments announced in the Spring Statement, including spending cuts, potential job reductions, and rising inflation, many employees are set to feel the squeeze,” says Firmin Zocchetto, CEO and Co-Founder of PayFit. “This means that, unfortunately, pay rises are looking even less viable, and the current climate will become even more challenging for many UK workers. With this in mind, coupled with the high levels of dissatisfaction and worry around pay shown in our research, it’s clear employers must consider how else they can support and reward staff and promote financial wellbeing. Targeted benefits and support schemes - like salary advances, salary sacrifice schemes, subsidised childcare, discounts on essential services, options to sell back unused holiday, free food and drink, and subsidised travel – can all go a long way in boosting morale and helping to ease cost of living pressures.”

Alongside highlighting a case for re-examining compensation strategies, the findings also reveal a pay transparency gap. 38% of workers stated that unclear pay communication directly erodes their trust in management – putting businesses at significant risk of damaged loyalty and declining morale. This comes as only 16% have full trust in their employer; a statistic that drops to just 12% for workers ages 18-24.

Zocchetto adds: “Another clear finding from our research is that unclear pay communication erodes trust, especially among younger employees who are already grappling with financial literacy issues. Only by improving transparency around pay, and offering a better education and understanding of how to stretch pay further, can we ensure workers feel both valued and supported through these tough times.”

For more startup news, check out the other articles on the website, and subscribe to the magazine for free. Listen to The Cereal Entrepreneur podcast for more interviews with entrepreneurs and big-hitters in the startup ecosystem.