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  • Writer's pictureEleanor Walker

Supporting employees through the cost of living crisis (when pay rises aren’t an option)

A piggy bank with eyes, on a plain surface.
Supporting staff with the rising cost of living

The current economic climate in the UK is causing significant challenges for employers. The steep rise in the cost of living means that people are wanting higher salaries (whilst being told not to ask for them), with many employed people turning to food banks and choosing between heating and eating. At the same time, organisations are finding it impossible to keep up with the soaring rate of inflation.

If that wasn’t enough of an HR headache, the so called ‘great resignation’ has led to an incredibly competitive recruitment market and a record number of ‘hard to fill’ vacancies, with the voluntary sector being the second hardest hit after healthcare. If we want to keep hold of our people and continue to attract great talent, we have to find ways to stand out.

If you’re not in a position to give everyone a cost of living increase that’s in line with inflation (currently at 9.1%, with the potential to rise to 11% soon), what can you do to support employees with the cost of living crisis?

Promote flexibility to reduce costs

The cost of a day in the office

Many organisations are beginning to encourage employees to return to the office, and the benefits that this can bring to collaboration, culture and employee morale are not disputed, but this comes at a significant cost to some employees. Offering greater flexibility can be a really simple way to help reduce costs.

Example: Penny - a single parent working in London on a salary of £35,000

Childcare (pay for her 2 children to attend before and after school clubs) = £38

Petrol costs driving to the train station = £4

Parking at the train station = £12

Return train ticket = £11

Lunch (she didn’t have time to prepare her own) = £5.80

Total cost of a day in the office = £70.80 (twice a week)

Even after annual leave, Penny is spending nearly 20% of her annual salary on getting to work, which is likely to be even higher during school holidays.

At Atkinson HR Consulting, with many of our team members being parents to young children, it’s important to us that they are supported to thrive in their roles, so flexibility has always been a key part of our working culture, however this has been even more powerful with the rising cost of childcare.

Working remotely means that we don’t have regular commuting costs, and the fact that we have flexible schedules focused on outcomes and impact (rather than time spent at your desk), means that we can do the school run when we want to, without having to always pay for wraparound childcare. Our unlimited annual leave policy means that we are better able to plan school holidays, without having to save up our entitlement, and therefore reduce childcare costs. This flexibility can also mean access to cheaper leisure activities and healthcare services during the working week, without having to worry about holiday limits and ‘clocking in’. All of this costs the business nothing, saves us money and stress, and leads to more productive, motivated and happier team members.

Choose flexible benefits that reduce monthly outgoings

One of the ‘benefits’ of the current challenges faced by employers is that organisations are having to think much more creatively and carefully about their benefits package, and those that have already done so are much more able to stand out in a crowded labour market.

Any employee benefits that can help to reduce the cost of monthly outgoings, for example discounts on shopping, entertainment, utilities, travel and leisure, are likely to be extremely helpful to employees as they strive to rein in their spending to combat the increasing cost of living.

There are hundreds of employee benefits providers that can help maximise your budgets to help find the best discounts for your people. Since employees at different stages of their lives and careers will have different needs, it’s worth considering an annual budget to allocate to a flexible benefits provider that enables colleagues to choose the benefits most useful for their situation.

If your organisation can’t afford to spend extra on a benefits platform, perhaps you can negotiate discounts with local businesses (restaurants, gyms, shops etc.). Failing that, do some research into what’s available for free and communicate it to your staff. For example, is a free service that enables employees in the Voluntary Sector to purchase supermarket gift cards at a discount, as well as access a number of other discounts and cashback offers. Your EAP may also offer some discounts or additional perks that are important to communicate.

Help with the ‘big costs’ to reduce short term debt

Many employers are considering offering workplace loans as a more sustainable option for employees needing to make large purchases, particularly in times of crisis, for example home repairs, emergency travel or medical care. This can be a much more pocket-friendly option than using credit cards, high-interest loans or ‘buy now pay later’ options on large purchases.

An even more generous option could be to offer an employee hardship fund which employees can access when they need to, without the need to repay it. This may be used for example to help with rent payments or rental deposits, legal fees, purchase essential items, or to get out of debt.

Some employers are taking this a step further, and offering funds for employees to access for whatever they want (we recently heard and loved the term ‘happiness fund’). The idea is, each employee has an annual ‘allowance’ which they can use to access training, put towards a holiday, or use for an experience. This can be particularly useful when you consider than some of the lowest income families will be sacrificing things like family days out, holidays, eating out and treats due to the rising cost of living.

Help with savings

The Money and Pensions service estimates that 12 million people in the UK have less than £100 in savings, and this is likely to increase. Furthermore, those that are most likely to need to rely on savings (i.e. those on casual contracts), usually find it much harder. Automated savings apps (e.g. Plum, Chip, Chase) use AI that puts away different amounts throughout the month based on affordability; and employers can help simply by supporting people to research the best option for them, and by signposting to different options.

Payroll savings products (including ‘opt out’ savings plans) can also be an effective way of supporting financial wellbeing by helping employees build savings with minimal effort. This research conducted by the Money and Pensions advice service and Nest is an interesting read for anyone interested in the benefits of this approach.

If you’re not in a position to easily implement a formal savings scheme just yet, perhaps consider how you can motivate, and potentially even reward, employees for working towards their personal savings goals. Creating a savings community can be a really powerful way for employees to work together to encourage and motivate each other to save. You could even offer to contribute a percentage of the amount that they save, as an additional motivator.

Raise awareness about healthy habits

According to recent research, 12 million UK workers describe financial insecurity as their biggest concern (more than mental health and work-life balance struggles)​, and more than 1 in 4 employees run out of money before payday. It would be naïve to assume that educating people about money management is the answer to the financial struggles we’re facing, however in many cases, really can help.

It’s therefore worth considering how employers can help people to take better control of their finances. Options include bringing in experts from your pension provider or EAP to host training sessions on financial planning, budgeting tips and money management, including planning for the future and for financial crises. A simple initiative such as a weekly newsletter highlighting money-saving deals, financial planning tips or sharing resources and articles to help with financial well-being can make a huge difference to those feeling overwhelmed by their current situation.

It's also important to make sure that your organisation does everything it can to raise awareness of the financial benefits it offers, as well as what might be available from outside of the organisation. Turn2Us estimates that a massive £15 billion in benefits has been left unclaimed, simply because many people in-work do not realise they are eligible to apply for Universal Credit.

There’s no avoiding the fact that the cost-of-living crisis is putting huge amounts of pressure on our financial well-being, but massive pay increases are simply not an option for many employers, particular within the Voluntary Sector. Now is the time for organisations to think outside of the box and highlight the ways in which their benefits package can help with financial wellbeing, if they want to retain skilled employees and stand out in a crowded job market.


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