Helping employees through the cost-of-living crisis
Managing money in 2022
How can employers help - is a pay rise the right answer?
One obvious answer that springs to mind for individuals is they need to be paid more.
But this isn’t so obvious if you’re footing the bill - organisations have to balance this against other ongoing cost pressures. Pay rises compound (and are often pensionable), and additional salary is subject to tax and National Insurance (which is also higher from April 2022), so a pound of cost to the employer doesn’t mean a pound of benefit for the employee.
Offering a temporary cash allowance or one-off bonus could address some (but not all) of these issues – could the “heating and eating allowance” catch on, or is there something else employers can do?
Back to (the financial) basics
A longer-term fix might be to help your employees get more from their money.
Without cuddling pets to stay warm, as one energy supplier suggested recently… it’s worth looking at spending habits that can quickly add up. How many of us have taken an initial free offer on a subscription service and forgotten to cancel? Bought an outfit that’s sat in the wardrobe gathering dust? Got in the habit of buying lunch or coffee out?
Budgeting is part of the solution, but money skills go way further than that, and the lack of understanding in the UK is truly worrying – across all income levels. You’d be surprised how many people are struggling to pay off high interest debt from their income, while at the same time holding large amounts of cash in a low interest bank account.
Then there are those racking up more debt just to keep food on the table or manage costs – only 60% of UK adults report they could pay an unexpected but necessary expense of £850.
With financial wellbeing worsening, how can employers reach those who need support?
Engaging employees with their finances
Bulk communications can only go so far – the minority who are familiar with the materials and tools available are usually the most confident and on top of their finances. It’s important to reach the employees who are really struggling, those who can’t pay the unexpected expense for example. These people will often have a knowledge gap, a lack of confidence, or both.
By identifying the main issue that is blocking better financial wellbeing for each individual, you can give the employee the specific support they need. Often this isn’t more money, or access to a new financial product, but a listening ear and a helping hand.