The rise in poverty among working people has risen dramatically and today one in eight workers are struggling to make ends meet. Here, we explore how employers can provide support to workers and help with the cost-of-living crisis, while also building the financial resilience and wellbeing of their employees.
Crisis point for employees
According to a survey by Which?, one in five Britons today have to borrow money to buy daily essentials. Soaring food, energy and petrol prices have left 77% of us feeling extremely worried.
These higher levels of anxiety and financial insecurity have a negative impact on the workplace. Higher absenteeism and turnover, lower productivity, and performance.
The impact of financial stress on the workplace is staggering. Now, it’s more important than ever for employers to help with the cost-of-living crisis.
As well as helping to protect your workforce from increased financial stress, investing in employee wellbeing delivers some serious business benefits:
- Better performance and productivity.
- Higher retention rates.
- Lower absenteeism.
- Lower staff turnover.
Today, most employers understand that the wellbeing of their workforce is not just ethical, it’s also good for business.
We’ve listed 10 ways you can help with the cost-of-living crisis and create more resilience in your business.
1. A decent wage
In the public sector, the cost-of-living squeeze has seen the UK experience some of the biggest strikes in three decades. With inflation and the cost-of-living soaring, salary increases have not kept up.
A recent survey found that more than half of Britons cannot cope with their current salaries, and unions are encouraging the Government to fund an above-inflation pay rise.
A pay rise is one way that employers can promote financial wellness among employees. In the private sector, several well-known names have done this.
Lloyds Bank, for example, gave 99% of its workers a 3.6% pay rise. Supermarket chains, Morrisons, Lidl, and Marks and Spencer’s have all also raised salaries in response to the crisis during 2022.
However, not every business can afford to increase salaries. So let’s look at some other ways companies can support employee wellbeing through the cost-of-living crisis.
2. Create rewards packages that include benefits in kind
In place of driving up fixed pay costs, some employers are increasing their investment in employee benefit plans. These longer-term investments typically improve company culture and employee experience, and help support your workforce as the cost-of-living soars.
Platforms such as Perkbox offer rewards and discounts for employees that can add up to hundreds of pounds each month. Discounts on days out, cinema tickets, and meals can be invaluable to households that are struggling.
Benefits and Rewards teams can also consider expanding salary sacrifice schemes. Even though an employee will take home a little less pay at the end of the month, the benefit received is far cheaper than purchasing it outside of the scheme.
Childcare support vouchers, health insurance, and pension schemes are the most well-known non-cash benefits. These types of benefits in kind can help ease employees’ financial struggles.
3. Give employees a cash lump sum
Instead of a wage increase, some companies are choosing to give employees a lump sum to help with the cost-of-living crisis.
Earlier this year, Lloyd’s Bank offered £1,000 to all its workers and Rolls Royce chose to support employee financial wellbeing with a lump sum of £2,000.
While a cash lump sum from employers is arguably a temporary financial boost, it does demonstrate to employees that an organisation cares about the financial health of employees.
4. Support employees to access government benefits
Up to 7 million people in the UK are missing out on benefits they are entitled to, and many of these people are in full-time work.
Some employees may assume that because they are in full-time work, they are not eligible for government support. However, universal credit is for people in and out of employment.
Single-parent families, carers, and employees who are renting and have childcare costs may be eligible for financial help. There are lots of ways that employees can check they’re getting the right entitlements.
As an organisation, you can support your employees by providing an Employee Assistance Program (EAP). EAPs are typically a phone helpline that employees can call when they have a personal problem that’s affecting their work.
There are many EAP providers, and most packages of support vary a little. Some key areas of support that EAPs focus on are professional counselling, practical and emotional advice, and signposting to other organisations for more specialised support.
5. Provide mental health support
There is a strong link between mental health and financial wellbeing.
When people are experiencing financial stress, they’re more likely to suffer mental health problems. Conversely, when someone is experiencing mental health issues, they’re more likely to experience financial stress.
Talking about financial difficulties or debt is a difficult subject for most people. While 83% of people are affected by soaring food, energy, and petrol prices, 46% still feel uncomfortable talking about it.
Most companies now offer employees some level of mental wellbeing support, typically through EAPs.
But with new challenges emerging like the cost-of-living crisis, increased burnout rates, and difficulties in disconnecting when working from home, some employers are taking additional measures.
- Regular check-in with workers and ask them how they are doing.
- Encouraging more social connectivity through in-person gatherings.
- Open discussions, webinars and workshops supported by mental health practitioners.
- Mental health days off.
6. Recognise the importance of financial wellbeing
According to the CIPD, one in four employees say money worries affect their ability to do their job. Employees with low levels of financial wellbeing can have a serious impact on your business.
Organisations that recognise the detrimental impact of financial worries are implementing robust financial wellbeing strategies.
An effective financial wellbeing strategy aims to ease financial stress by providing rewards, benefits, resources, and support to help meet employees’ financial needs.
Some common components of a financial wellbeing strategy include:
- Earned wage access (also called on-demand pay)
- Financial coaching
- Pension schemes
- Budgeting and savings support
Not only are financial wellbeing strategies useful for your workforce during the cost-of-living crisis, they can also be a useful tool in recruiting and retaining employees.
Consider taking a deeper dive into financial wellbeing to understand the importance of financially well employees for your organisation.
7. Be flexible in how your employees work
Stay open and promote communication with your workforce. Perhaps some of your employees would benefit from a cycle to work scheme?
Ditching the expensive, petrol-reliant car at this time may help ease financial hardship. You won’t know this unless everyone talks openly about the problems and potential solutions.
Being flexible in where your employees work can also help ease financial stress and help with the cost-of-living crisis. For some, working from home helps them save money they would otherwise spend on commuting.
Some companies, like Airbnb, are launching the next generation of work from the work from home (WFH) policy. They’re called work from anywhere (WFA) policies. This gives employees the freedom to live in an area with a lower cost of living.
8. Explore the option of allowing staff to sell unused annual leave
Aviva made the headlines when they launched a policy that allows employees to exchange unused annual leave for extra salary. This can be a useful way to ease financial strain. However, it is also a controversial one.
While selling unused annual leave has reportedly been a success for Aviva, there are plenty of critics of selling annual leave. Encouraging workers to take a break is one of the most important ways to avoid burnout in the workplace.
Many fear the ability to sell unused annual leave could lead to an increase in burnout, which is detrimental to employees and businesses. It’s up to organisations to assess the suitability of this type of policy based on what they already know about their employees.
How Openwage can help during the cost-of-living crisis
There is no doubt that financial resilience is more important than ever and offering support to employees throughout this crisis makes ethical and business sense.
Here at Openwage, we’re on a mission to help employers pay their employees in a fairer and more rewarding way that also builds financial resilience.
Contact us today to find out how on-demand pay can help with the cost-of-living crisis.