With the UK in a cost-of-living crisis, more and more people are struggling to make ends meet, with the cost of basics like food, heating and accommodation rising sharply.

As a result of factors such as the Covid-19 pandemic, Brexit and Russia’s invasion of Ukraine, the cost of living rose sharply during 2021 and 2022. According to the House of Commons, the annual rate of inflation reached 11.1% in October 2022 – a 41-year high. A survey by Which? has also revealed that some branded staple foods are now costing up to 910% more than their budget counterparts. 

Consumers are feeling the effects of this dramatically. In July 2023, The Times reported that an estimated 1.3 million households in the UK defaulted on or failed to pay for an essential bill in a single month.  

More recently, a study by KPMG showed that mortgage holders are making big changes to their finances to cope with higher payments, including dipping into savings and extending the length of their mortgage terms.  

So, with work and income playing a vital role in peoples’ ability to cope with the cost-of-living crisis, how can employers support their employees through this difficult time?  

Salary sacrifice schemes 

Employers can help employees to manage their finances effectively by offering salary sacrifice or salary exchange schemes. These give employees the option to exchange part of their gross salary, before tax, for necessities like childcare vouchers, transport (such as the cycle to work scheme, a company car or car parking), gym memberships and additional pension contributions.  

By offering benefits such as these, employers can reduce financial pressures for their employees as salary sacrifice benefits are not taxable. What’s more, as the employee’s pay will be slightly lower, their tax and National Insurance contributions will also be slightly reduced.  

Offering support at mealtimes 

To reduce employees’ supermarket bills, employers can offer support at mealtimes by providing food, drinks, or snacks in the office. Whether this is through a breakfast club, free tea and coffee or providing a meal at lunchtime once a week, it could really help to reduce people’s food costs.  

To avoid food waste and ensure value for money, employers can also make sure that any leftovers are utilised, perhaps by offering for employees to take leftovers home for their family or using them again the next day.   

Hybrid working 

Everyone’s personal circumstances are different, and so are priorities when it comes to cutting everyday living costs. Hybrid working is another way employers can ensure that all staff are supported, allowing them to work in a way that suits their responsibilities, schedules and budgets best.   

For example, those living close to the office may prefer to walk or cycle into work, reducing the need to use energy on heating and electricity when working from home. On the other hand, those living further away may prefer to work from home, saving costs on transport to and from work.  

Offering a hybrid approach will mean that employees can prioritise the things that mean the most to them, whilst also keeping their living costs in check. 

Prioritise wellbeing 

According to the Chartered Institute of Personnel and Development, one in four employees say money worries affect their ability to do their job, and in May 2023, the Mental Health Foundation released a report which showed that 32% of people surveyed said worries about being able to afford bills made them anxious in the last two weeks.   

With money and mental health clearly connected, employers can address this issue by offering workplace mental health programmes which are accessible for everyone. This could be a mental health first aider, access to free or discounted health activities or a subscription to mental health resources.  

There is a huge stigma around speaking about money worries, so employers should offer a safe space where employees can discuss their problems and be signposted to relevant financial advice and guidance.  

Internal communications 

If employees are feeling the pinch and are worried to talk about their money worries, they run the risk of feeling unsupported and disengaged from their employers. To prevent this, employers should have a strong internal communications strategy in place, to make employees aware of how they can help.  

Effective internal communications will keep staff informed and engaged, and there is evidence to show the value of this. According to McKinsey & Company, employee productivity increases by 20-25% in organisations where employees are connected – so it will not only benefit employees, but employers too. 

If you’re an employer and need help communicating what your company is doing to support staff in the cost-of-living crisis, whether internally or externally, please get in touch. Our integrated team can help provide strategic recommendations and identify opportunities for change – you can contact us on esg@weareliquid.com.