What can employers do to help employees with the cost of living crisis?

The cost-of-living crisis is poised to deepen this month, when national insurance contributions will rise and inflation, energy and water bills are set to soar. The annual CPI inflation, already at a 30 year high of 5.4% in December 2021, is predicted to increase to 7% in April, way above wage growth. UK households are set to see a £1200 rise in outgoings, a significant cause of worry for many workers across the UK who will have less disposable income.

Though the Bank of England has insisted that rising inflation is only a temporary side effect of the post pandemic economic boom, the war in Ukraine and economic sanctions on Russia have intensified concerns for consumer prices in the UK. The invasion of Ukraine threatens even higher prices as any disruption to the supply of energy will affect prices in the UK, causing bills to escalate further.

So, what can employer do to help their staff?

In an ideal world an above-inflation pay rise would clearly help many workers. However, realistically few organisations will be well placed to provide such an increase given the currently unstable and uncertain economic environment.

Some companies, however, have already confirmed that they will be increasing staff wages. Lidl announced it would be spending £18 million boosting the wages of 21,000 staff by paying them £12.25 per hour for those who work in London. Similarly, restaurant chain Green & Fortune announced that from December 2021, it would be paying its staff more than the London Living wage. CEO John Nugent said, “We’ve known inflation is likely to rise, and if we expect our staff to be smart, and happy, we need to ensure we are doing our bit by boosting their pay.” M&S have also announced plans to raise the basic rate of pay to help staff cope with the rising cost of living.

However, a pay rise isn’t the only way to help employees with the cost-of-living crisis. There are other things that an employer can do especially when they themselves are feeling the pinch. Firstly, an employer should acknowledge that different employees will face different impacts from the situation, and this may affect what they need from their employer. Some employees may be concerned about rising utility costs so may prefer to come into the office more often, whereas others may benefit from remote working as this reduces their transport costs. It is important for an employer to engage in communication with employees, so that employees can voice their concerns and opinions. An employer should be flexible and discuss how they can best support their employees.

One way to provide support is reminding employees about (or introducing) discount platforms that can help them save money on consumer goods. If there is any Employee Assistance Programme in place, an employer could refer the employee to this as this may include mortgage advice, financial planning and debt management as well as other non-financial issues. An employer may wish to consider offering counselling to help manage the emotional challenges that often accompany financial difficulty.

Offering staff benefits that reduce the costs of living e.g., health cash plans either covering or paying money towards the cost of everyday healthcare will be helpful. Salary sacrifice schemes such as such as a cycle to work scheme may well be beneficial well. With the price of diesel and petrol hitting record highs in February 2022, commuting motorists are feeling the squeeze and may opt to cycle to work instead. There may be schemes that already exist within the business which employees don’t know about, and HR has an important role here in communicating what is available and encouraging uptake. It would also be beneficial to use communication channels and encourage managers to signpost employees to sources of financial wellbeing. Employers could also consider providing workplace financial education, which would help empower employees with skills such as budgeting and personal finance to help individuals make the most out of their money. M&S have introduced free health checks for its employees, new benefits such as online GP service, financial management advice and health check screening will also be included in new provisions for workers.

An employer should ask employees how they can best support them through this crisis whilst also recognising that they do not have a bottomless purse.