With an increase of 1.25% in National Insurance contributions which came into force in April 2022, coupled with rising inflation, a hike in food, transport and utility costs, it is no wonder that the UK is experiencing the biggest cost of living crisis in decades.
UK households will experience the largest decline in their income since the 1970s which is unlikely to be abated by working longer hours or suddenly being able to secure a better paid job as a Government Minister recently advised the population. This is likely to cause untold unhappiness and stress to individuals affected which will have a knock-on effect on productivity, engagement and motivation at work. It can also have an effect on physical and mental health, including sleep and cognition. Organisations could also experience a decline in staff retention.
The obvious solution would be for employees to receive an at or above-inflation pay rise. However, in reality, few organisations will be able to provide this or, in fact, any pay rise especially following Brexit, the recent covid-19 pandemic, unstable economy and uncertainty that has ensued following the invasion of Ukraine.
Employers could, however, use this as an opportunity to ensure that pay outcomes and processes at their organisation are fair by checking the reasons for pay gaps by gender or ethnicity.
Other practical ways employers can help
Prevention is better than cure and employers may worry that providing financial wellbeing support may be overstepping the boundaries between work and private life, but it can be invaluable to employees at relatively low cost to employers. One point to bear in mind though is that all employees are different and have different experiences and needs. What one may require, another may not. Employers should be sensitive to this and not treat all employees the same.
On the one hand, some employees may be concerned with the rise in utility costs so may prefer to come to the office and not pay for gas, electricity, broadband, telephone bills, printing costs etc. Conversely, others may prefer flexible working or hybrid/remote working so that it reduces their transport costs which can be a significant outgoing.
Employers, via their HR teams and managers, should engage and communicate with employees effectively to understand their concerns and communicate what support is available at the organisation. They may also consider being more flexible should an employee ask for permission to take on a second job outside of working hours that does not conflict with their current role.
Benefits and Discounts
There can be a vast number of ways that employers can help, including:
- Providing access to product and restaurant discount platforms to employees. This can help employees save money and reduce their overall costs and outgoings.
- Perks and benefits of employment could include a contribution to travel costs as a benefit in kind, fruit baskets in the office and vouchers that can be used in the same way as cash at certain stores.
- An Employee Assistance Programme (EAP) is helpful for employees as they can seek advice on debt management, financial planning, stress/mental health, mortgages etc.
- Free counselling sessions could be provided by employers to help those who are significantly affected.
- Health cash plans by paying money towards the cost of everyday healthcare.
- Salary sacrifice schemes allow an employee to exchange part of their salary for extra benefits e.g. the cycle to work scheme may be beneficial given the cost of petrol and diesel for motorists. There are also childcare vouchers, company cars etc.
- Providing information regarding pension schemes and making it more accessible is also useful as in times of financial pressure, younger staff (as well as older staff) may stop or reduce their contributions so they should be aware of the long-term financial risk of this as well as the reduction in employer contributions too. Information regarding pension structure and the short and long term financial benefits of making contributions can be beneficial.
- Providing financial education by offering financial wellbeing workshops for staff to educate them on budgeting and financial planning etc can be more beneficial than a pay rise in some instances as it will equip employees with life skills.
- Season ticket loans.
- Interest free loans (although this can bring its own issue in the future if an employee is unwilling or cannot pay it back).
- Increased support for lifestyle benefits such as contributions to gym memberships can also benefit employees’ financial health.
Some schemes may already be available but employees may not be aware of these, so it is important for employers to communicate these schemes by way of circulars, their intranet, posters and in one to one meetings with managers.
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