The cost of living has become an increasingly pressing issue, affecting individuals and families across the country. Escalating prices for housing, energy, transportation, and essential goods have strained household budgets, with many individuals facing financial stress and limited discretionary income.
Employers can play a crucial role in supporting their employees during these challenging times by offering considered and targeted employee benefits.
Understanding the Cost-of-Living Crisis
The cost-of-living crisis refers to the situation where the prices of essential goods and services rise at a faster rate than wages, leaving individuals and families struggling to make ends meet. In the UK, this crisis has been fuelled by factors such as the scarcity of affordable housing, stagnant wages, inflation, and increased energy and food costs.
Housing affordability has become a significant concern, particularly in cities, where rental and property prices – along with mortgage rates – have continued to rise. With a limited supply of affordable housing, many individuals are forced to spend a significant portion of their income on housing – in England, private renters on a median salary could expect to spend 26% of their monthly income on rent, with this rising to 40% in London[1].
Despite this increased cost of living, wage growth has not kept pace with rising costs; growth in total pay fell by 2% in the year to April 2023 when adjusted for inflation[2]. This wage stagnation exacerbates the financial challenges faced by individuals and has left many struggling. It’s a widespread issue; one in four adults are either in financial trouble or on the brink on financial difficulty[3]. Invariably, this will impact an individual’s overall well-being, job satisfaction, and productivity.
How can employers support employees with rising costs?
Employers can alleviate some of the financial burden faced by their employees and play a pivotal role in helping employees manage increasing costs through a thoughtful and comprehensive benefits package:
Discounts and Perks
Employers can provide near-immediate support by implementing a discounts portal that offers accessible reductions on everyday expenses. This can include discounts on groceries, transportation, and entertainment – with many big-name retailers signed up to provide discounts. Cumulatively, these discounts can make a significant difference – with individuals able to save hundreds of pounds each year.
Financial Education
Employers can offer financial education programs, workshops, or access to financial counselling services. Empowering employees with financial literacy can help them make informed decisions, manage their budgets effectively, and navigate the cost-of-living crisis. Financial education sessions can also help them prepare for their retirement, set other saving goals and identify available products that align to their needs.
Flexible Working Arrangements
Providing flexible working options – such as remote work or flexible working hours – can help employees save on commuting costs and achieve a better work-life balance. This flexibility can reduce transportation expenses and improve employee satisfaction, and help employees save on ancillary costs such as after-school clubs or peak travel rates.
Health Benefits
Investing in comprehensive private medical insurance and wellness programs can alleviate the financial strain associated with healthcare expenses. Offering access to gym memberships, mental health support services, and preventive care can positively impact employees’ overall wellbeing and help mitigate the risk of developing irresponsible financial habits. Medical cash plans, optical care and dental schemes can also help ease the strain of point-of-care costs whilst ensuring employees have affordable access to necessary medical services.
Retirement and Savings Programs
Employers can help support employees longer-term financial outlook by offering an array of retirement plans and savings programs, such as workplace ISAs and pension schemes. Encouraging employees to save for their future can provide them with a sense of security and help mitigate the impact of rising costs.
Transportation Benefits
Companies can provide convenient commuter benefits, such as season pass loans or fuel cards. For employees who need to purchase a new mode of transport, tax efficient electric car schemes and cycle-to-work initiatives can significantly reduce costs, enabling them to allocate funds to other essential areas.
Wellbeing Programs
Financial stress can negatively impact employees’ mental and physical health. Employers can implement wellbeing programs that provide resources and support for financial education, counselling, and stress management. These programs can help employees better navigate their finances and reduce the negative impact of the cost-of-living crisis on their overall well-being.
Employee Assistance Programs (EAPs)
EAPs offer confidential counselling and support services for employees facing various challenges, including financial difficulties. By including financial counselling as part of their EAP, employers can provide employees with the tools and guidance they need to manage their finances effectively.
The cost-of-living crisis poses significant, multifaceted challenges for individuals and families, impacting their financial stability and overall wellbeing. Employers have a vital role to play in supporting their employees during these challenging times.
By implementing comprehensive employee benefits programs that address the rising costs and financial pressures, employers can contribute to a more resilient and engaged workforce. Through these strategic and empathetic measures, employers can help alleviate the burden of the cost-of-living crisis and foster a more financially secure future for their employees and boost resilience.
If your workforce is struggling with any of the issues raised in this article, please get in touch to see how we can help.
[1] https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/averageweeklyearningsingreatbritain/june2023
[2] https://www.theguardian.com/business/2022/oct/21/people-uk-struggling-pay-bills-fca-financial-trouble
[3] https://www.ons.gov.uk/peoplepopulationandcommunity/housing/bulletins/privaterentalaffordabilityengland/2021
