As the threat of recession looms, workers’ ability to cope with the cost of living themselves is their top priority.
The price of essential goods like food and fuel is growing far faster than wages, which puts workers in a dire position. The lifestyle most are accustomed to is becoming unfeasible, and this is likely to impact every aspect of employees’ lives.
Take the UK as an example: the country is now several months into its “cost of living” crisis. According to the Office of National Statistics (ONS), 77% of people feel worried about rising costs, and 53% of employers believe that the UK is entering a new, ‘more unstable’ period of employment relations.
Recent studies found that 26% of men and 18% of women have already requested a pay rise to help offset inflation, while 16% of men and 10% of women have asked for their benefit package to be expanded. The financial stress is also causing productivity to drop, and mental health concerns are being exacerbated.
Things appear comparatively rosey in America: just 16% of US workers say they are struggling financially. But this is unlikely to last; unless inflation is suddenly brought under control, similar patterns will be seen in the States soon enough.
In this article, we explore exactly how the cost of living crisis is impacting staff – and what employers should do to attract and retain their best workers during these challenging times.
Five Things to Expect During the Cost of Living Crisis
1. Employees Demand More Support
Real wages fell at a record rate between April and June in the UK. 30% of employees now say their salary doesn’t cover their living costs, and 31% are asking for more hours. But in the absence of significant government support, most expect their employers to help them through this period.
This is not simply a request; we have already seen widespread strikes take place, and 42% of employers expect to face increasing levels of industrial action over the next 12 months.
2. Increased Turnover
For those unable to force their employer’s hand, leaving may be the only option – and 12% of workers have already found a new job. While estimates vary, there is also a huge uptick in the number of workers planning to quit their jobs because of the cost of living crisis – with some studies finding 50% – 75% of workers are considering it.
This appears most prevalent in the legal professions and hospitality, followed by finance, IT and education. In all of these industries, more than 30% of workers are currently considering quitting their jobs in search of better pay.
3. Working Multiple Jobs
An alternative to quitting is simply taking on a second income stream. It’s estimated that 17% of Britons have already done this, and more are likely to join them as the situation gets worse.
The implications for this are not great, as workers exhaust themselves. But it is also likely to make them less loyal to their employers, as they always have the option of giving up one of their jobs.
4. Mental Health Problems
This is inevitable, as everything from eating to socialising becomes harder to financially justify, and employees wrestle their way towards better pay, new jobs or more hours.
5. Lower Productivity
A function of poor wellbeing and overworking is a drop in productivity – and that’s exactly what reports are finding. Workers are less able to concentrate; less motivated because they feel a lack of support; and less committed, as they scour the job market for a new employer.
But what can employers do about that? How should they go about getting their workforce through this crisis? And how can they attract and retain more staff?
Five ways Employers can Help During the Cost of Living Crisis
1. Increased Flexibility
89% of workers say flexibility is an essential factor when looking for a job today. Whether they are trying to fit in a second job or simply working around other commitments, granting your people greater flexibility in the current economic climate will go a long way.
2. Targeted Benefits
Not all benefits are equally important, and businesses should focus on those that best help relieve the cost of living strain. For example: five times as many people say they would appreciate free on-site parking than gym memberships as part of their compensation. Anything that reduces financial burdens for employees is essential.
3. Review Rewards
As the CIPD notes, cost of living bonuses run the risk of doing more harm than good to those on Universal credit, so it’s vital that you consider the full impact of every measure undertaken and provide support tailored to individuals’ financial situations.
4. Improve Communication
employers can reduce some of the anxiety and shame associated with the cost of living crisis by encouraging more open, empathetic internal communication. This could be as involved as a Financial Wellbeing initiative to help educate employers about how to make their money go further, or as simple as asking managers to discuss concerns directly with staff
5. Cover Key Costs
Businesses that can’t afford to offer large bonuses or pay increases should try to give employers a financial boost in other ways. A simple example is through providing free food on-site; another is by offering employees work phones or laptops if required, to reduce their own running costs.