As the cost of living rises, data from Barclaycard revealed that Brits are cutting back on buying new clothes and having meals out at restaurants while also being more selective about their weekly shops.
While the country experiences economic uncertainty, it’s clear that people are concerned about affordability of essentials like fuel, rent/mortgages and heating. So, how can employers help employees navigate through a cost of living crisis?
Not only is it essential to provide tips for saving money to your employees, but you can also implement employee assistance programmes that support people through these challenging times.
Below we will explore some of the ways you can boost employee financial wellness, encourage retention and improve mental wellbeing by assisting with the burden of financial worries.
how can employers help with the cost of living crisis?
In the spring, our Randstad Employer Brand survey of 163,000 respondents revealed that work-life balance was the most important driver when choosing an employer for the majority (65%), closely followed by an attractive salary and benefits (64%). We now know that an attractive salary has climbed above all other motivators for switching jobs - according to the CIPD’s September 2022 ‘Resourcing and talent planning report’, pay and benefits is now ranked the most important element of employer brand when it comes to attracting candidates, knocking ‘perception of employer’ off the top spot.
With the average UK household set to pay up to £4,266 on energy bills from January 2023, a decent employer brand and nice office atmosphere isn't enough to stop your valued employees from fleeing to competitors who pay more.
So, the first solution to the question, "How can employers help with the cost of living crisis?" is to consider giving employers discounts in order to provide some relief to outgoings and free up extra money for essentials:
employer discounts
If you run a large corporation or have extra room in an annual budget, a great way to help your workforce with the cost of living crisis is to provide a discount scheme.
You can find a list of discounts available in retail, transport deals, gym memberships, and restaurants for example.
As many people won't be able to afford leisure activities or dining out, this is an excellent way to boost people's mood and offer financial relief.
Sometimes, people can use discount codes to pay off more oversized tech items like computers or mobile phones. These products are essential for working and will make a huge difference for struggling employees.
employee assistance programmes
Also known as EAP, an Employee Assistance Programme can help individuals who need extra support during the cost of living crisis. This can range from support in wellbeing, personal problems, and saving money tips.
This is an excellent resource for employers as it provides your workforce with a safe space to reach out to others for help. You can find referral services for people who need legal advice, and counselling is available.
If your employees feel overwhelmed with the cost of living crisis, this is a way for them to feel understood and offers an opportunity to get practical support.
Nearly four in ten told us that their employer doesn’t offer access to financial wellbeing/money management advice sessions to help with the rising cost of living.
one-off cost of living bonus
Many employers are stepping in to help their employees with the rising cost of living, by offering a one-off bonus.
The CIPD’s summer Labour Market Outlook for 2022 revealed that 15% of organisations have paid, or are planning to pay, such a payment to some or all their workers, while a further 15% have the matter under review. Private sector firms are most likely to have paid this bonus (18%) - especially those in the primary and utilities (30%), financial service (26%), and construction (25%) sectors.
At face value, employees will surely welcome this gesture. But for some low-wage employees in receipt of Universal Credit or Tax Credits, a one-off or lump sum bonus could interfere with their benefits payments and leave them struggling to budget and make ends meet.
If this is something your organisation is in a position to offer, it will of course do wonders for your employee motivation and retention.
encourage saving techniques
Even though the cost of living crisis has drained savings accounts for people, it's a good idea to encourage your employees to continue saving money from their salary.
A best practice model to communicate, and a good way to work out how much to allocate to needs, wants and savings is by following the ‘50/30/20 rule’.
- The rule states that you should spend up to 50% of your after-tax income on needs and obligations that you must-have or must-do.
- The remaining half should be split up between 20% savings and debt repayment and 30% to everything else that you might want.
Or, you can organise an event for a guest speaker to promote online tools or other resources that can teach new employees about savings. This is particularly important for young employees if this is their first job.
More tips for employees on how to save money from their salary can be found here.
remind employees of pensions
Pensions are another thing that employees are cutting back on as the cost of living prices rise, and people are thinking less about the future and more about day-to-day living costs. However, communicating the benefits of pensions is crucial for your staff.
It can be easy to forget about future financial planning when the bills keep increasing, but pensions are one of the best benefits to employees, especially when employers make good contributions.
Compared to freelancing or other job roles that don't offer pension schemes, you don't need to think about retiring without money by putting money aside into your pension every month.
To help people navigate their finances, you can book counselling appointments for staff so they can discuss with a financial adviser what will work best for their situation.
get rid of the stigma
No matter how much money you have in your bank account, it's never enjoyable to admit that you're struggling with money. You can feel like there's nowhere to turn.
As an employer, it's your responsibility to create a welcoming and understanding environment where there's no stigma around financial struggles.
Having accessible discount schemes, or EAPs, inspire more dialogue with employees. And it removes the shame of money problems. This will help people find support during these challenging times.
Above all else, you need to provide resources for employees to browse and find a solution to help them. As everyone has unique backgrounds and faces individual worries, a one size fits all approach won’t necessarily work for all.