We are living through an unparalleled and enduring crisis in living standards. With inflation outpacing pay increases, workers are materially worse off than a year ago.
While the UK Government has sought to buffer people from these pressures through help with energy support, the scale and duration of rising living costs mean that, the role of employers in supporting the financial wellbeing of their workers has come under the spotlight.
New analysis from the Work Foundation explores the role employers should play in the financial wellbeing of their workers through and beyond the cost of living crisis and is supported by an employer guide which outlines steps employers should consider in developing their own approach to financial wellbeing, along with case study examples.
Staff wellbeing is a priority for many employers during the cost of living crisis but support has often been responsive, ad-hoc and short-term
Nearly seven in ten senior business leaders (66%) agreed they have a substantial role to play in supporting their staff through the rising cost of living.
Despite this positive sentiment, however, only two in five employers surveyed (40%) introduced new support for their workers since the start of 2022, with larger organisations more likely to take action.
Less than half of employers (18.2%) who had introduced financial support last year introduced above standard incremental increases in pay. This indicates that support is more often responsive and to tailored to short term circumstances, rather than workers’ longer-term needs.
Secure work and predictable pay are key to supporting financial wellbeing
Employers should target support towards workers on low pay and in insecure work who are particularly vulnerable as both living and borrowing costs rise.
One of the most effective ways of supporting individuals on low incomes is reviewing and improving terms and conditions in consultation with staff and union representatives.
This should include considering minimum guaranteed hours for those on variable hours contracts to ensure earnings are predictable; reviewing sickness absence policies and occupational sick pay rates to create a robust safety net and increasing flexibility around working patterns, which can play a key role in reducing living costs.
Engagement and consultation are key to delivering financial wellbeing support that meets workers’ needs
Involving workers in decision making is pivotal in ensuring they can raise their priorities and concerns, and where possible, organisations can tailor support to meet them.
It is also important to avoid any unintended consequences associated with specific financial support measures. For example, providing a one-off cost of living payment can disrupt Universal Credit claims, potentially leaving workers on low incomes no better off than they otherwise would have been.
And in addressing financial wellbeing in the workplace, both at a strategic and operational level, employers must be mindful of the stigma associated with money problems
Both Government and employers have a pivotal role to play. The Government has a key responsibility in improving the working conditions of millions of workers. Recommendations include strengthening employment rights and ensuring everyone has access to good, secure work and employers reviewing job security and developing a strategic approach to financial wellbeing.
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