How can we best support employees with the cost-of-living crisis?
This article was first published on LinkedIn. Subscribe to Jane-Emma Peerless' 'HR Money Blog' newsletter to read her articles as soon as they are published.
When Martin Lewis, king of money saving and general rescuer of the public from the PPI banking scams of the 90’s foretells the havoc that the energy crisis is going to have on households this winter – we know we are all heading for trouble.
Wage inflaction has many of us rushing to increase salaries to keep in line with the market, despite the warnings fromthe Governor of the Bank of England not to do so. This is not practical or sustainable for many businesses and the impact is deep. It's important to get ahead of the conversation. Ultimately good employees will value the opportunity to develop and progress over immediate salary concerns and this can be wrapped into the conversation. A formalised structured training programme to reach full potential is a great conversation to have with your star employee.
In 2017 Gove completely transformed the apprenticeship scheme. Trailblazer Apprenticeships were developed with world leading companies, creating occupational standards for their sectors. Collating a stepped salary progression in line with an accredited Apprenticeship Qualification could prove invaluable to retain the right employees within your organisation.
In addition, there are a host of discounts offered to apprentices which will help your employees tackle the cost-of-living crisis. As an example, employees on the scheme who are over the age of 18 can enjoy free travel in London for 12 months – this will save the average person up to £1,476 per year and effectively act as a pay raise.
Closely linked to inflation, the cost of living has increased by 7.9% in the year leading up to May 2022. This is the steepest increase households in the UK have seen since 1982, and impending energy price rises are not likely to help the situation at all. In May, Ofgem predicted that energy prices would rise by £800 up from its previous average of £2,000, but the actual situation is worse – in January of 2023, the average household can expect a bill of £3,615. With the average wage in the UK being £31,285, this represents a huge chunk of income for many people.
So what can we, as employers, finance and HR teams do to help colleagues to cope?
1. Embrace the various employee benefit schemes that are coming onto the market.
Private Medical Insurance has been around for a long time, but the more affordable health cash-plans provide a much-needed injection of cash into everyday health necessities such as visits to the dentist, optician and physiotherapy etc. These can add between £500 to £1500 of additional cash benefit for the everyday health necessities depending on which level you choose.
Most healthcare providers offer these programmes, but many are geared towards larger workforces. We still favour BUPA, mainly for the reliability and value for money. However, we put this under regular review as other providers improve. BUPA do not have an App and other companies include a variety of additional extras. Medicash has a great App and a host of additional extras including skincare mole monitoring and mental health support and Vitality Health link a healthcare offering with a host of gym and fitness benefits.
2. Support financial health and behaviour.
Help employees manage their cash flow. A practical way to do this is to ensure that your staff are not digging into their own scarce cash resources to pay for expenses and then claim back. Asking employees to offer what is effectively a short term loan to the company they work for is something of a hobby-horse of mine. When there are so many good alternatives out there which make it easier and transparent for both employee and employer, I’m staggered it still happens. Caxton leads the market in this field but there are many others as well.
Companies like Wagestream (one of the better ones) make it possible for employees to draw down on accrued wages before pay-day, allowing then to keep in step with their own personal cash flow cadence and reducing the need for short term, high interest loans or Buy Now, Pay Later services. It also offers tools to help with financial planning and regular savings.
If you want to adopt for a more home-grown approach and company cash flow is secure then consider the option of extending an employee a short term interest free loan up to a certain value and then repaying through payroll over a number of months.
Other companies within my HR network have started hardship funds for those in serious need. This has been greatly appreciated and HR peers report that abuse is low.
3. Help employee save money with incremental savings tips**
- If appropriate, suggest working from home more often to avoid the cost of travel.
- Check that providers you use offer discounts schemes. e.g the benefit provider ThanksBen (a Caxton favourite) gives access to retail discounts via Perks at Work.
- Maybe support employees with free coffee and other office perks – or offer the Pret subscription. A small gesture can make a big difference.
- Suggest taking a look at the MoneySavingExpert website for genuine, helpful tips on how to make their money go further. At Caxton we are taking the opportunity to team up with the website to offer consumers a better deal on our currency card.
There is a lot of good advice about how we can all support our people. The CIPD has much on their website on financial wellbeing and tackling in-work poverty which is worth a read.
Ultimately, it is likely that many people will struggle over the winter, and as employers we have an opportunity to be creative in how we support our employees. Of course, telling our people how much we value them, giving positive reinforcement with positive comments on something you know they have worked on will lift spirits and make that person feel valued and it costs nothing.