Productivity
BACK_TO_BLOG

Five Ways to Support Employees During a Cost of Living Crisis

The current cost of living crisis, that is the fall in real disposable income, is a major concern for UK workers and employers. How can companies best support the financial welfare of their employees and alleviate the pain of inflation?

The current cost of living crisis, that is the fall in real disposable income, is a major concern for UK workers and employers with 77% of adults feeling worried about rising costs. How can companies best support the financial welfare of their employees and alleviate the pain of inflation?

With UK inflation at 10.1% in September, the highest rate in more than 40 years, food, energy, and fuel costs are escalating. High inflation is outstripping wage increases; in the three months to August, Real regular pay fell by 2.9%. The Bank of England expects the rate of inflation to peak at 11% in October and then remain above 10% for a few months, before starting to fall. This means people should brace themselves for a prolonged period of financial uncertainty.

The impact of a cost of living crisis on employees

Productivity

The cost of living crisis is likely to push more and more employees into in-work poverty. According to CIPD research, 10% of workers don’t think their job protects them from falling into poverty. A fifth of UK households already have ‘negative disposable income’ and food and fuel poverty has more than tripled in a year.

UK workers are trying to navigate the crisis by requesting pay rises, taking on extra hours, or even an additional job to supplement their income. According to the latest report from Royal London, 16% of workers in the UK have taken on an additional job to help pay for the cost of living increases, while a further 30% will need to do so if costs continue to rise. Based on employee research for The Adecco Group’s 2022 Global Workforce of the Future report, salary is the top reason for workers to change jobs, with almost half (48%) of all those that want to quit in the next 12 months stating that salary is their main reason.

We cannot forget that financial worries also negatively impact people’s mental health and wellbeing. As many as 77% of adults in the UK report feeling very or somewhat worried about the rising cost of living. This has been particularly difficult for people in low-paid employment, and with caring responsibilities.

The increase in workers’ anxiety contributes to lower job performance. 18% of workers noticed a decrease in productivity due to financial worries. Employers risk a disengaged and distracted workforce if they are unable to help alleviate cost of living concerns. We can already see a rise in ‘quiet quitting’ where some employees are prioritising the prevention of burnout over working additional hours.

There has also been a rise in the ‘quitfluencer’ whereby 50% of workers who have seen others quit have taken action and left their job. 70% of workers who have seen others quit have then considered quitting themselves. Providing space, coaching, and processes for open and honest conversations are some of the key retention recommendations for employers.

Employers face their own challenges during a financially challenging time

Productivity

This situation also contributes to hiring challenges experienced by employers, as many candidates are reluctant to seek out new roles because of uncertainty. Consequently, the latest Report on Jobs published by the REC shows the weakest rises in permanent placements and temporary billings for 19 months.

Many businesses also face increased staff turnover as those in low-paid, temporary, and insecure employment look for better paid opportunities. Some workers might currently be more interested in permanent rather than temporary contracts. Job security is the third most important factor to workers and candidates, after pay and work-life balance. Insecure employment such as zero-hour contracts is one of the key drivers in high employee turnover.

How then can employers support their workers through these difficult times, as well as decrease staff turnover and attract new talent?

Whether your business has four employees or 4,000, there are many ways employers can support their workforce during a cost of living crisis and make the business attractive to new candidates.

The most obvious form of support is a pay rise or offering a ‘one-off’ cost of living payment or allowance. If an employer can afford a cost of living bonus, they should make sure it doesn’t negatively impact those employees who claim universal credit. As well as this, particularly the lowest-paid employees should receive a fair wage. Our Autumn Labour Market Outlook aims to support you and your business in understanding the competitive landscape and determining the appropriate salaries to offer so you can attract and keep the best talent for the job.

As businesses themselves are also facing financial challenges caused by increased energy prices, they may not be able to offer a pay rise above the inflation rate. This might be particularly true in the case of SMEs. If a pay rise or a bonus is not financially viable, employers should consider other ways of support.

Productivity

Non-financial support employers can offer

Employers should provide financial wellbeing support, such as offering targeted benefits and normalising conversations about money. They should consider directing staff to resources that would assist them in making decisions relating to their financial wellbeing. Employers should ensure their existing employee assistance programme offers adequate guidance. They should also make sure that staff are well informed regarding what existing benefits are available to them which may assist at this time. These may include free or discounted food, staff discounts, childcare support, season ticket loans, or mental health and wellbeing support at this stressful time.

It is very important to support in-work progression, to help people increase their earning potential. For the lower paid, a route to progress is key to a prosperous future. Employers should also remember that the opportunity to progress is not only a great way to support employees’ financial progress but a key factor in developing in-house talent and increasing staff retention. According to PWC, only 40% of employees said their company is upskilling and even though pay was the most important factor in choosing a job, finding a fulfilling job was only two points behind (69%).

Productivity

Employers should also consider offering greater flexibility; allowing employees to sell their excess holiday, increase homeworking and consider moving to a four-day week to reduce commuting costs. Those unable to work from home could benefit from more flexible or different working hours; this could decrease their commuting cost or help with childcare. Think tank, Autonomy, calculated that the potential savings across commuting and childcare costs for workers transitioning to a four-day week could save them around £269 a month based on having two children.

HR professionals should make sure their employees are not missing out on government benefits they are entitled to. Many people who are in work assume they are not eligible for any kind of benefits such as universal credit. However, some circumstances can make them entitled, such as being a single parent, families who are renting and have childcare costs, or having someone in the household who is unwell. Job adverts should clearly detail benefits and cost of living support available to help attract candidates.

These solutions would not only help alleviate employees’ financial challenges and improve their wellbeing but should also improve retention rates and employee engagement.

Blog Home
...
Personal Development Plans: An Employer’s Guide

Our employer’s guide to personal development plans covers the benefits of PDPs and 5 steps to creating a PDP with your employee. As a business, your people are your most important resource, so it is essential that they’re able to perform to the best of their ability.

Learn More
...
An Employer’s Guide to Interview Questions

Our employer’s guide to interview questions gives you everything you need to find the best candidate for the role. With the post-pandemic labour market opening back up and an increasing number of potential candidates actively seeking new opportunities.

Learn More
...
How Company Culture Can Help Attract And Retain Top Talent

What is company culture and how can it be used to improve employee retention? Get tips on improving your company culture to help attract and retain your talent. Company culture can be defined as the personality of a company. It encompasses how people within an organisation interact with each other and work together.

Learn More

×