A brief background on what your employees are going through
The UK is in the midst of a cost-of-living crisis, where the whole country has been affected by a steep increase in the day-to-day costs of living, including household bills.
And with a recession predicted for the winter of 2022-23, employers need to be aware of the challenges their employees are facing, and how they can help mitigate them.
And how does the cost of living affect your employees at work? Well, a recent poll conducted by the CIPD found financial insecurity is having a knock-on effect on performance at work. More than a quarter of respondents said money problems were affecting their job performance and a fifth found money worries affected their sleep.
28% of respondents said that money problems affected their job performance.
Salary increases
Improving benefits and discounts offering
Nothing, we can't afford it
Nothing, we don't see it as an issue
Several factors are contributing to the crisis.
Firstly, UK inflation has reached a 40 year high at 8.6%, leaving many struggling to pay their bills. One of the UK's biggest energy suppliers E.On has warned that up to 40% of its customers will be in fuel poverty by October as it called upon the government to help struggling homes. E.On UK boss Michael Lewis said the rise in energy prices is "unprecedented" and a growing number of its customers are in arrears.
Likewise, fuel prices have reached record highs in 2022, with the average price of petrol hitting 191.53p-per-litre and diesel reaching 199.05p in July.
These combined factors mean that a lot of the UK population are struggling just to cover the basic costs of living. Even those previously in relative financial comfort are now under strain. More than ever, people are looking to their employers for financial support and guidance.
When a working person’s income, after housing costs, is less than 60% of the national average, they don’t earn enough to meet the cost of living – they are living in poverty.In the UK, this already affected one in eight workers before the current cost of living crisis emerged
A combination of factors can make it difficult for many working people to escape poverty:
Low income, with pay rises failing to keep up with the rising cost of living.
Poor job quality and employment practices leading to financial instability, and trapping people in low-paid roles.
A lack of genuine, two-sided flexible working practices that enable people to fit their work around their caring responsibilities and health needs.
Financial hardship caused by unforeseen setbacks in personal circumstances, such as a relationship breakdown, bereavement, or illness.
The ‘poverty premium’ which traps those on lower incomes in a cycle where they pay more for goods and services.
The cost-of-living crisis is only increasing the chances of people falling into in-work poverty. In fact, the rising prices could mean an increase in absolute poverty and material deprivation. It's estimated that absolute poverty will increase by over 3 million people between 2021/21 and 2022/23.
In the rest of the guide we’ll discuss how you can support your employees going through this turbulent time, so they can make the most of what they earn and look after their wellbeing too.
