Mitigating cost-of-living pressures in the workplace
New research has found that three quarters of HR leaders believe that cost-of-living pressures are affecting employee performance.
The survey also found that 34% reported a fall in productivity as a result of employees being distracted by other things. Two in five HR leaders believe that employees are increasingly forced to navigate personal affairs during working hours. When asked what changes they had noticed in their workforce, 40 per cent said they believed employees were doing life admin such as looking for cheaper energy tariffs or talking to mortgage lenders. Almost one in five respondents of the survey reported that employees had taken annual leave to manage their bills as a direct result of increased financial strain on households.
The findings come as data released by the ONS this month saw inflation rise to 4% and core inflation remain stagnant at 4.2%, with around four in ten energy bill payers struggling to afford payments and a third finding it difficult to pay their rent or mortgage.
Employers can play a critical role in supporting their workforce during these challenging times and many have chosen to offer employees additional time off, counselling services, financial programmes and one-off payments. The Purpose Coalition works with many organisations who understand that offering the right support to their staff in the workplace makes good business sense. Clear signposting of the help available not only gives the access to practical information and advice but also provides reassurance and stability.
Purpose Coalition partner and challenger bank, Virgin Money, recognised that cost-of-living pressures meant that its staff needed more support if they were going to be able to help customers manage their money effectively. Its purpose - ‘Making you happier about money’- promotes financial stability, acknowledging that financial wellbeing contributes to overall wellbeing. One-off payments, permanent salary increases, financial advice and an employee benefits programme have been instrumental in supporting colleagues, backed by a broader approach to their wellbeing. A Life More Virgin offers a wide-ranging, flexible working strategy that includes remote working, wellbeing days and paid family leave. They are measures which have seen better engagement at work and rising retention rates as staff are given the space to deal with the complex problems that the economic situation has brought for so many.
Co-op, also a partner, has a long history of supporting colleagues’ financial wellbeing. It has offered generous pension schemes for over 100 years and was the first major retailer to offer colleagues the chance to access their pay early, allowing them to deal with unexpected expenses or fluctuations in their cashflow. The majority of the money is used to pay bills or buy groceries and the scheme gives them certainty over the cost and repayment. The business also recognises the importance of staff maintaining a certain level of savings to promote financial resilience. It has been trialling a scheme where they are automatically enrolled into a savings account with a £40 savings contribution and, with many participants saving for the first time in their lives, its success provides a roadmap for future strategy.
Water company Pennon, also a partner, focuses on financial wellbeing alongside mental, physical and community wellbeing. It has stepped up its employee support programmes to ensure staff are able to continue in their careers despite the wider challenges faced, reporting lower-than-average levels of absenteeism. The company is recognised as a Living Wage Employer by the Living Wage Foundation, voluntarily paying all staff at least a living wage, rather than minimum wage. It also uses income protection and employee assistance programmes to support staff.
The economic situation will continue to pose challenges for many people, especially the most vulnerable. A new report by the National Institute of Economic and Social Research (NIESR) calculates that the living standards of the 12 million households in the lowest half of the income distribution in Britain will be between seven and 20% lower in 2024/25, relative to 2019/20, and won’t return to pre-pandemic levels until the end of 2027. That is a sobering outlook, and one which underlines why it is crucial that organisations continue to respond to the needs of their staff in an open dialogue, supporting them with measures that are effective and inclusive.
