As of December 2022, inflation in the UK is at 10.5% - five times the 2% target. With the Bank Of England predicting inflation levels will remain high for the foreseeable and the continuing strain from the energy price increase, it is no surprise many of us are feeling stressed about money. But how is this going to affect businesses and workers moving forward?
At this moment in time, the necessities of life are getting more and more expensive. Food, fuel, energy, and other basic living costs are continuing to rise dramatically. Mortgages have been increasing for a number of years, but we are now seeing ridiculous rent prices in many popular cities, forcing some renters to move out as they simply cannot afford this new reality. Even getting to work so we can earn money is taking its toll, as commuter costs have also increased. The situation only worsens when you consider that many employees have not received a pay rise in the past two years, and those who have, the rise is well below current inflation rates.
The logical next step is to look for alternative employment, and that seems to be where many workers are heading. A recent study shows that a third of employees are considering or have applied for a new job, whilst 65% now see a salary increase as their main priority when looking for a new role† – compared to career progression or better work/life balance. Taking on 2nd or even 3rd jobs is also becoming increasingly common, with side hustle culture being encouraged now more than ever.
This is going to have a massive affect on business if employers do not support their workers, as many will lose their staff. As well as this, the anxieties around the cost of living can affect employees behaviour and productivity at work. They might be feeling distracted or stressed, and the quality of their work will decrease. Debt or money struggles have always been a catalyst for depression or anxiety, which could make workers more likely to take absences from work. Ironically all of this could result in them losing their jobs, which of course worsens the problem.
Supporting your Employees
So how do you support your team? The most obvious answer is to increase your employees wages, however it is not always possible or even the most helpful thing to do. We know that businesses have their own increased costs to contend with, and so may not be able to pay any more than they do. Also, depending on the specifics of the job role/employee, a pay rise isn’t always beneficial. A pay rise comes with an increase of tax contributions and can also impact universal credit or other benefit entitlements. Therefore, although a wage increase should be encouraged and aimed for, its important to work out what is best for your individual employees, and have benefits that cover some of their other costs. Such as …
Staff welfare benefits – life and medical insurance, dental cover, etc
Being open to flexible working to save on commuter expenses
Discounts on entertainment, gyms etc
Cash allowances for work from home employees
Mental wellbeing support – free access to therapy, mindfulness sessions etc