As someone who runs my own business, there are two bits of research that have caught my eye in the past few weeks. Individually, neither is particularly dramatic, but when combined they represent a real challenge for London businesses.
The first is the latest report from High Fliers confirming that the median starting salary for top graduates has stuck at the same level since 2010. From 2004 until then, it grew roughly in proportion to the growing cost-of-living. Yet owing to the downturn the figure has stagnated four years in a row.
The second stat – which should make some businesses nervous – is that rental prices in London have increased to such an extent that the average London rent (£1,348/month) is now more than twice the average rent in the North East (£520/month). It’s a worrying situation when the brightest young talent are being offered a diminishing quality of life if they choose to work in London.
It only takes a quick check of any jobsite to see that there are some great companies offering competitive salaries for jobs in the North East. It isn’t sustainable for businesses to continue to assume the brightest young grads will keep throwing away so much of their income on London rent, when they could be living the high life away from the capital. Businesses need to give their employees the confidence and security they need to stay.
One of the many reasons some of the brightest workers are attracted to London is because of its innovation and creativity. Yet employers need to ensure they’re applying this innovation and creativity to how they motivate and retain their staff. It’s great to offer pension schemes, life insurance and gym membership as enticements to your staff where many other businesses still don’t.
However, to attract the best workers, businesses need to make it feasible for their employees to remain in London and not lose them to more affordable areas. Living in London is a delicate balance, and there are two main ways that businesses can help their employees
1. Lend employees their rental deposits
Even the cheapest shared accommodation in London can reach £650-700/month, and landlords often demand a deposit of six to eight weeks rent. This means that companies hoping to hire the brightest and best graduates fresh out of university are expecting them to have nearly £1,500 in the bank. Companies should therefore soften the blow of their employees moving to the city by loaning them their deposit, to be repaid over the course of their first two years. There’s little risk to the company, as the amount would be roughly a month’s salary, which can be withheld if anything goes wrong and the employment is terminated. Such an offer would help to entice the best candidates to apply, and demonstrate the value you place in supporting your workforce. Companies who can’t afford to pay all the deposit up front for their employees can still make a loan contribution. With London prices so high, every little helps.
2. Subsidise their ‘me’ time
It isn’t just having somewhere to live that’s so expensive in London, day-to-day living adds up too. With a strong work-hard play-hard ethic, many Londoners need to find the time to relax, or risk burning out. It’s in everyone’s interests for employers to get involved in this. Many firms already subsidise or pay for gym membership. Yet to go one step further, it’s crucial that employees take time out to recover, reset and recharge. Companies who contribute to their employees wellbeing with a leisure allowance – a contribution that might go towards tickets for the theatre, football or a new art exhibition – can reap the rewards of a de-stressed and re-motivated staff whose minds are open to new forms of creativity. Immersing staff into the wealth of cultural activities the greatest city in the world has to offer enriches your workforce and its ideas: that’s the creative spirit that makes London great.
If the cost of living in London continues its rise, there’s no doubt that salary is going to become an increasingly vital criteria for job applicants. Companies who can’t compete with larger companies on salary have to be inventive and stand out with what they can offer employees. There aren’t metrics to gauge the benefits to a company of having motivated staff, but it should be high on the priority list for any business. If businesses can offer prospective employees the benefits of London life without the drawbacks, London should retain and continue to attract its world class talent.