Cost of living crisis: can employers afford to do nothing?

Just as we were starting to get back to normal post-pandemic, a new crisis has emerged. Employees are now struggling with living costs–including the cost of travelling to work. Can employers do anything about this–and should they?

Rolls Royce has offered 14,000 workers £2,000 and a 4% backdated pay rise. While 4% is lower than the rate of inflation (currently 9% in the UK), it at least shows that the company is aware of the crisis and looking to boost employee retention and attraction in the current candidate-short market.

Some employers have found the crisis has already affected productivity, with a recent study by the Centre for Economics and Business Research (CEBR) showing that 10% of employees have missed work because of financial problems. Companies that do nothing risk financially stressed employees becoming disengaged and distracted, with increased levels of mental illness and sickness absence.

While not every employer has deep enough pockets to hand out pay rises like Rolls-Royce, there are plenty of more creative ways to support employees, including:

• Increasing staff discounts
• Reviewing profit share arrangements
• Selling back unused holiday entitlement (make sure employees still take the statutory minimum)
• An emergency fund
• Interest-free crisis loans
• Season ticket loans
• Hybrid working to cut travel costs
• Staff food banks
• Financial wellbeing assistance
• An income streaming service like Wagestream so employees can access pay early
• Salary sacrifice schemes where employees can get childcare vouchers or buy a bicycle through a cycle-to-work scheme

Like the pandemic, this is uncharted terrain where employers need to learn as they go. Some employers may say they simply can’t afford to support their employees financially, but in the current talent drought, the real question is: can they afford not to?