More than four in five (83 per cent) large employers are taking action or considering ways to help employees in the face of the cost of living crisis, a new survey by PwC has found.
The study of UK reward specialists from companies with more than 250 staff highlighted that support is largely going to come through increased pay for essential workers (53 per cent), additional pay reviews (51 per cent) and one-off bonuses (40 per cent).
Additionally, 15 per cent of large organisations were also found to be looking at non-monetary interventions, such as increasing staff shopping discounts, supporting employees with home insulation, rolling out financial wellbeing programmes and exploring employee hardship funds.
With the Bank of England’s prediction that inflation will hit 18.6 per cent in January, and the energy price cap to increase gas and electricity bills by 80 per cent in October, Alastair Woods, pay and employment partner at PwC, said interventions were needed to protect both staff finances and long-term talent strategies. “We are seeing the conflation of two major employment issues – the rising cost of living and skills shortages,” he said.
“In the current economic climate, employers need to consider how to target spending to have the most impact on workers. A more flexible and innovative approach to reward and working conditions will be critical, but so will programmes that hold on to talent for the long haul.”
Woods’ comments support PwC survey findings, among other research, which showed that employers were looking at alternate ways to retain and recruit employees, citing lack of available external talent and difficulties with hiring timescales.
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In fact, new Canada Life research suggested that focusing on helping employees with the cost of living crisis could help the talent agenda; the insurer’s data showed that four in five workers felt their employer should be providing support as living costs soar.
To do this effectively, Jamie Lawrence, head of content at Wagestream, said employers needed to look at what financial levers they could use to help workers as well as helping to destigmatise workplace financial discussions and understanding the impact finances have on mental and physical health. “Any organisation, from small to huge, can play a proactive part in encouraging employees to talk about money, and that’s important because our research found that feelings like shame and embarrassment stop people talking about it,” he said.
He added that employers needed to understand how their own employment structures might be exacerbating employee money issues. “Things like flexible working can be one of the biggest contributors to good financial wellbeing. For example, if you're a parent, you have pinch points where you have to be away from work to get a child from nursery. In that way, it’s like you've got an artificial ceiling on your earnings,” he said.
Further to this, Lawrence explained that flexible approaches to work might include taking a creative approach to hours worked, allowing employees to swap shifts more easily, and to think about the employer role in helping workers save.
Similarly, Charles Cotton, reward and performance adviser at the CIPD, said that employers needed to consider where employees spend most of their money and how they can affect this, such as helping them to cut commuting costs, providing free transport, or paying for travel and food expenses, and looking at how to help with rent and childcare.
He added that the language used when talking about this was crucial – many low-waged workers might be used to being frugal but for middle earners the rising cost of living is likely new territory – and that employers have to understand solutions are not all on them. “HR teams and employers will struggle to try and mitigate the impact of the cost of living crisis all on their own, and will be struggling with rising costs themselves,” Cotton said.
“Other parties, most notably the government, also need to play their part in supporting households and businesses.”