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LONDON—
PLC is offering U.K. staff a one-time payment of £2,000, equivalent to about $2,450, hoping the bonus will help ease pressure from union officials and employees over rising inflation while keeping a lid on the jet-engine maker’s costs ahead of an uncertain economic future.
The move is one of many approaches companies are taking to address soaring inflation that has unions and workers in many parts of the world demanding higher pay. For months, private companies have been boosting salaries and wages and offering signing or retention bonuses, amid exploding post-lockdown demand and super-tight labor markets. More recently, surging prices for items from food to fuel have weighed on workers’ buying power, pressuring employers to boost pay to make up the shortfall.
That’s especially the case in the U.K., which is suffering through one of the Western world’s highest bouts of rising costs. Inflation hit 9.1% in May, its highest since 1982, the country’s statistics agency reported Wednesday. Rail strikes have hobbled the country this week, with unions asking for cost-of-living increases in wage negotiations.
But companies have become nervous about boosting their own costs, at a time when many are now expecting a significant economic downturn as central banks raise interest rates. Some are slowing hiring, revoking job offers and in some cases letting go staff as they reposition. The governor of the Bank of England, the U.K.’s central bank, has also controversially asked workers not to seek steep pay hikes, warning it would stoke inflation.
Rolls-Royce is one of several major companies and employers in the U.K. offering bonuses to aid employees with higher living expenses. Lloyds Banking Group offered its staff a £1,000 bonus. Oxford University committed to a one-time payment of £1,000 to its staff earlier this month.
Rolls-Royce, a British blue chip that shed its luxury-car business years ago, said earlier this week it was offering 14,000 U.K. employees its first-ever bonus not tied to performance. The bonus came alongside a 4% raise for shop-floor workers.
Union leaders, representing 11,000 of those workers, are holding out for more. The two sides are negotiating after Rolls-Royce management came back with a second, undisclosed offer. “This is a good deal for our colleagues that is fair and competitive, with an immediate cash lump sum to help them through the current exceptional economic climate,” a Rolls-Royce spokesman said.
In a memo to staff outlining the offer, Chief Executive
Warren East
said a simple wage increase isn’t affordable or responsible and would add “too much cost into the long-term wage bill at times of such high uncertainty.” The company derives most of its income from manufacturing and servicing engines for
Boeing Co.
and
biggest wide-body aircraft. Demand for those aircraft, mostly operated on long-haul international routes, is trailing the quicker recovery for smaller jets as the industry emerges from the pandemic-era slump in travel.
The latest bonus offer “falls a long way short of the cost-of-living crisis claim submitted by our members and their expectations,” a spokesman for the union, called Unite, said.
Write to Sara Ruberg at [email protected] and Benjamin Katz at [email protected]
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Appeared in the June 23, 2022, print edition as ‘Rolls-Royce Offers Workers A Bonus as Inflation Relief.’
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