The current cost of living crisis in the UK marked by rising inflation and falling real disposable income is placing immense pressure on workers and employers alike. With 77% of adults expressing concern over escalating costs, organisations must now ask: how can they support the financial wellbeing of their workforce while also protecting business performance?
In September, inflation reached a 40-year high of 10.1%, affecting everything from food to energy to transportation. Real regular pay fell by 2.9% in the three months to August, and the Bank of England anticipates inflation peaking at 11%. This economic uncertainty is pushing many employees toward in-work poverty, with 10% fearing their jobs can’t shield them from financial hardship.
The Impact on Employees and Business
The financial strain is prompting many UK employees to seek pay rises, take on extra hours, or even adopt second jobs. A report by Royal London found that 16% of workers have already taken on an additional job, while 30% say they may need to follow suit if the cost of living continues to rise. Unsurprisingly, salary remains the top reason for job changes, with nearly half of those considering leaving their job citing pay as their main concern.
Beyond financial pressure, mental wellbeing is deteriorating—especially among lower-paid workers and carers. Financial stress contributes to reduced productivity, with 18% of employees reporting decreased performance. This has sparked trends like “quiet quitting,” where workers avoid overexertion to protect their health, and “quitfluencing,” where witnessing colleagues resign inspires others to consider doing the same.
For employers, the crisis also complicates recruitment and retention. Workers are seeking job security, fair pay, and support. Insecure work contracts and temporary roles are now significant drivers of turnover. So how can companies respond effectively?
Five Practical Ways to Support Employees During a Cost of Living Crisis
1. Offer Financial Support Where Possible
Providing a pay rise or one-off cost of living payment can offer much-needed relief. For businesses unable to offer substantial raises, ensure any financial bonuses do not impact employees’ eligibility for benefits such as Universal Credit. It is especially critical to ensure lower-paid workers are earning a fair, competitive wage. Use labour market data to benchmark your salaries and stay competitive.
2. Promote Financial Wellbeing Resources
If direct financial support isn’t feasible, consider indirect assistance. Educate staff about budgeting, debt advice, and available financial tools. Ensure your employee assistance programme (EAP) covers financial guidance, and encourage staff to utilise benefits like subsidised food, childcare support, staff discounts, and mental health services. Open communication about financial struggles should be normalised to reduce stigma.
3. Encourage In-Work Progression and Upskilling
One of the most sustainable ways to help employees increase earnings is to provide clear progression pathways. Offer training and development opportunities that allow staff to move into higher-paid roles. Not only does this help employees, but it builds internal talent pipelines and strengthens retention. According to PwC, while pay is the most important job factor, job fulfilment closely follows at 69%.
4. Introduce Flexible Working Options
Help employees cut costs by offering flexible schedules. Remote or hybrid working can significantly reduce commuting and childcare expenses. Consider implementing a four-day work week where feasible. Think tank Autonomy found this could save workers an estimated £269 per month. Employees with fixed on-site duties may benefit from staggered hours or condensed schedules.
5. Maximise Awareness of Government Support
Many employees are unaware that they may qualify for government support. HR teams should guide staff toward checking eligibility for Universal Credit or other available benefits. For instance, single parents, renters with childcare costs, or those living with a household member who is unwell may be entitled to support. Highlight these options in job postings and internal communications to assist both current staff and prospective candidates.
Final Thoughts
The cost of living crisis is a long-term challenge, but employers have an opportunity and responsibility to support their people through it. By offering a mix of financial, wellbeing, and practical support, businesses can improve retention, safeguard productivity, and build a more resilient workforce.
At Resource Provider Ltd, we are committed to helping companies develop strategies that support their employees while remaining competitive in a turbulent market. By prioritising employee wellbeing today, organisations can build stronger teams for tomorrow.