We are experiencing rapid growth in the cost-of-living in 2022 and it is not set to stop any time soon with inflation hitting 9.4% in June. HR and business can play a key role in helping employees navigate through increased costs and narrowing disposable income.
Do not worry, whilst it will be mentioned increasing wages is not the sole thing businesses or HR departments can do to help employees.
HR has a responsibility to find solutions alongside senior management to mitigate rising costs for the business, including developing policies and increasing employee pay in line with inflation. Policies can be put in place which could see employees’ disposable income go further i.e., discount schemes with larger retailers.
Management will also need to consider the likelihood of employees potentially experiencing in-work poverty. Those experiencing in-work poverty are usually on the lower-earning scale.
The CIPD define in-work poverty as; ‘when a working person’s income, after housing costs, is less than 60% of the national average, they don’t earn enough to meet the cost of living – they are living in poverty.’ They also highlight before the current cost-of-living crisis in-work poverty impacted one in eight workers.
Many employees believe senior management is not aware of or ignores in-work poverty, employees suffering from in-work poverty will begin to increase with the cost-of-living crisis.
Further to this, the Resolutions Foundation Thinktank carried out research which found on average those living in the UK are £8,800 worse off when compared to countries such as Australia, Canada, France, the Netherlands, and Germany.
The Living Wage Foundation (LWF) has been campaigning for businesses to provide employees with a ‘real living wage’, this would be an hourly wage that meets living costs. Businesses who follow the Living wage will be honored through a scheme that rewards them with Living Wage Employer Mark – boosting the business’s corporate social responsibility image, and potentially helping to combat the current war for talent.
From the LWF campaign that began in 2012, over 9,000 employers within the UK are providing employees with a Real Living wage. This generated £1.6bn for lower earners and the UK government took inspiration from this with their method for minimum wage. The Government also introduced the National Living Wage in 2016.
Why help employees during the cost-of-living crisis?
As ‘one in four employees say money worries affect their ability to do their job’ as CIPHR research has found between 2021-2022. This is due to them becoming distracted and disengaged from work with the constant pressure and stress of seeing their finances stretched further.
Many employees may be counting the pennies month to month, revaluating how much they can spend on certain requirements and essential items.
Financial worries and stress will have both mental and physical impacts, including:
- Little to no sleep
- Health problems (sickness)
- Enhanced symptoms of existing illnesses i.e., IBS/Crones
- Struggling to concentrate on work tasks
- Difficulty when making decisions at work
How can HR and businesses help?
Businesses and HR departments should be regularly reviewing their staff wages and benefits, exploring how the company manages their pay is critical. If not routinely reviewed, pay decisions within the company can become unfair and lack value for money. Senior management and HR departments should be reviewing individuals’ pay and the overall company pays, establishing if they could increase employees’ wages to help employees combat the rising cost-of-living.
Unfortunately, businesses are also feeling the pinch of costs going up especially following Brexit, coronavirus, and the war in Ukraine. Many businesses are struggling with production and overhead costs increasing. This is where creative benefits for employees can be a win-win situation for businesses, whilst helping employees with the rising cost of living alongside helping to improve the company’s culture.
What are creative benefits?
- Offering retail discount schemes
- Retail discount schemes help employees to make small savings on essential everyday products, helping their money to go further. The scheme works by providing a range of discounts for products as well as receiving discounts on gift cards and vouchers. Furthermore, employees can enjoy savings on other expenses such as days out, holidays, and cinema trips.
- Selling annual leave
- If an employee has annual leave remaining at the end of the year, businesses instead of making the employee take the leave or carry it forward to the next year, ask if they prefer to be paid for the annual leave.
- Tax-free items
- Employees that work from home can claim tax back, encouraging employees to do this helps with the increased costs of energy whilst working from home.
- Businesses should not use this as a way of pushing employees back to the office due to the increased costs of fuel and decrease in work-life balance.
- Health cash plan
- Health cash plans help employees with routine medical expenses including eye tests and dental appointments/treatments. Many companies use this as a way of attracting employees especially if the policy is advanced providing cover for a larger range of health care.
- Cycle-to-work scheme
- This scheme helps employees save between 26-40% on a bike and their accessories whilst spreading the cost over 12 months.
- How does it work? Firstly, the business needs to register with Cyclescheme then the employee will search for a bike of their choice in-store or online. The employer must confirm eligibility and pays for the equipment.
- The employer will get the money back over 12 months as this comes out automatically from the employees’ salaries. The scheme can also help employers and employees save on National Insurance.
Contact us today if you require advice on implementing employee benefits into the workplace.
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