The cost of living crisis: How employers step in to help

Nicola Ryan is concerned about rising inflation. It’s not just the effect of higher prices on her personally, or on her employer One and All, a school uniform maker based in Stockport, northwest England. She worries about the impact on all her co-workers trying to manage their family budgets. “We are in a real crisis,” says Nicola, Director of Peer Support. “We know [staff are] Really worried.” The summer months will be relatively easy compared to October, when the “weak point” will increase. [energy] Invoices “.

One and All increased wages by 4.5 per cent for all but managers – an increase that would seem generous in normal times, but now falls short of UK inflation, which hit 9 per cent last month and is expected to hit double digits in the autumn. . But the company is doing its best to direct help towards those in low-paid positions, including manufacturing and warehouse work.

It has increased the share of profits for all employees, which it expects to be worth more than £2,000 per capita this year, and has created an emergency fund to help those suffering. “We were really honest and said that this was because of the cost of living crisis,” says Ryan. “We are preparing for October.” This is in addition to current interest-free crisis loans for unexpected bills like boiler breakdown and free financial management tips. One and All is endorsed by the charity Living Wage Foundation (which sets a ‘real’ living wage at £9.90 an hour in the UK and £11.05 in London) and is also committed to ‘real living hours’, ensuring predictable turnarounds. out at least 16 hours a week.

After two years of pandemic turmoil, UK employers – as in much of the developed world – are facing rising costs. Although average wages are rising rapidly, by historical standards, inflation is rising faster. Government support of the kind announced on Thursday by Britain’s chancellor, Rishi Sunak, will help a lot but will not bridge the gap for everyone, and many families will remain nervous. And while some companies say they can’t pay workers more, others feel a moral imperative and intense commercial pressure, against a backdrop of labor shortages, to help low-income people.

Organizations say they struggle for affordability but feel a moral duty to help employees. “They’re trying to make their benefits package the best it can be,” says Sheila Atwood, managing editor at research group XpertHR, which tracks wage settlements by UK employers.

During the pandemic, many companies have enhanced sick pay arrangements or introduced new wellness and mental health benefits. Now the focus is shifting to food, childcare or transportation. In the UK, Sainsbury’s and Iceland supermarkets have increased employee discounts, while the Norfolk and Suffolk NHS Foundation Trust have set up a food bank for employees.

In the United States, some employers are offering to help with driving expenses, according to Becky Frankowitz, president of ManpowerGroup North America, a multinational recruitment company. “Gasoline subsidy new incentive. Transportation vouchers and [help with] Ride-sharing for the worker under $20 an hour, that’s pretty prevalent.”

In France, tax breaks give employers an incentive to offer lunch and holiday vouchers, and business group Medef has proposed redirecting tax firms that pay to fund public transportation to help car commuters fill their tanks. The turnout rate for Brim Macron, a tax-free bonus employers can offer to low-wage workers, has been low. Economy Minister Bruno Le Maire urged companies to do more.

Recent research by CEBR found that 10 per cent of UK employees lost working days due to financial problems, while another fifth of workers were less productive because they spend working hours worrying about money – at a total annual cost to companies of more than £6 billion. However, employers are concerned about taking responsibility for the costs of daily living, such as energy. Most companies think it’s best to process it through fixed payment. Provides more security. It’s hard to stop the allowances,” says Alasdair Wood, senior managing director at consulting firm Willis Towers Watson.

Norman Bekavans, director of human resources and a pioneer in financial inclusion, says many employers remain resilient about this problem. “Tackling it means acknowledging the problem – which means they have to do something about it.” He explained that the most obvious solution is to raise wages. “Everything else is like decorating windows.”

However, the UK’s CIPD – which represents HR professionals – says that even when employers cannot raise wages, they can still follow good practices to protect employees from poverty.

The first is to ensure that the lowest paid employees receive a fair wage. In the UK, the number of approved living wage earners has almost doubled since the start of the pandemic. Under pressure from activist investors, this year Sainsbury began paying its direct employees the real living wage, as other major supermarkets have done, although they are not officially certified.

Greater flexibility around wages can help, too. Aviva, the insurance company, is among the companies that allow employees to sell unused annual leave. And Willis Towers Watson says employers in lower-wage sectors are increasingly relying on tools like Wagestream, which provide immediate access to earned wages. There are concerns about such apps – which carry transaction fees, and can simply delay financial hardship. But employers in areas like hospitality and care say they are better than payday loans.

Other forms of flexibility matter as well, with many white collar employees now questioning the value of commuting. “We spent two years without commuting costs .” says Tim Oldman, CEO of Leesman Workplace Research [on] Our monthly salaries. All over the world, employees are thinking about the cost of commuting.”

A financial wellbeing app alone will not help. But you can get a lot of help from a decent financial education. . . As part of the strategy

Some companies are now repositioning homework as a cost of living rather than a work-life balance issue. “Companies are thinking of great flexibility in addressing employee concerns . . . Hybrid work reduces commuting costs and in this environment it is more attractive,” says Neil Carberry, chief executive of the UK Employment and Employment Consortium.

There’s also a new focus on salaries and career advancement, says Duncan Brown, an independent compensation management consultant. He adds that many low-paying jobs offer a “flat rate with no progression or career structure,” but that his 20-year-olds will now naturally demand in interviews when the salary is reviewed.

Frankiewicz agrees: “The most exciting thing is that employers and employees are now realizing that blue-collar workers expect and demand a career plan.” Traditionally this was a white-collar catalyst.

Whatever their long-term outlook, some employees will struggle over the next few months. Some employers offer targeted help: John Lewis, the employee-owned retailer, is doubling the financial aid fund, acknowledging that employees will find it “financially difficult.” However, most don’t get involved directly: the hype in HR departments about “financial wellbeing” generally translates into offerings of financial education and budgeting tools; pays to save more in pension; Or perhaps directing references toward debt advisors when needed.

For those workers whose problem is a lack of wages rather than the ability to manage money, this can seem like a cynical distraction. But advisers say they are helping to “normalize” conversations about financial concerns. “We have been encouraging employers to get people to talk about money issues more openly,” says Charles Cotton, senior advisor at CIPD.

“Companies should look at these things on the tour,” Wood says. “Financial wellbeing alone will not do any good. But you can get a lot of help from decent financial education, such as keeping track of your expenses as part of the strategy.”

Employers will have to pay more attention to the personal circumstances of workers as income pressures exacerbate. “Companies learn as they go,” Wood says, noting that most CEOs have no experience with leading firms during a period of high inflation. “The main thing is uncertainty,” he says. “No one knows when this will end.”