The cost of living crisis has taken over the UK news agenda for the past year. The term first appeared in mainstream media in late 2021 and has become more and more prevalent ever since.
The cost of living soared throughout 2022 as high demand for oil and gas pushed energy prices up and a shortage of goods led to supply issues. In turn, this caused prices to skyrocket and people were left with a fall in their real incomes. At its peak in October 2022, inflation reached 11.1% and has since reduced to 10.1% in January 2023.
In response, the UK government implemented measures to help protect Brits from the eye-watering cost of household goods and energy rates. We’ve seen flat payments to households and the Energy Price Guarantee as well as newer promises outlined in the Spring Budget of scrapping the prepayment premium and finding a way for disabled people to look for work without having their benefits affected.
But according to Reed.co.uk’s latest research* businesses still need to make some headway when it comes to stepping up for their employees during the crisis. We found that 38% of workers think that businesses should do more to support employees right now, and 47% of hiring managers share that same sentiment**.
Employers can look to put various measures in place to help employees deal with the crisis, which will not only lead to a more satisfied and productive workforce but will in turn help your attraction and retention efforts. Here are a few ways to support your staff, and attract new talent, during the cost of living crisis:
Increase salaries in line with, or above inflation
This may be an obvious start, but increasing salaries across your business in line with or above inflation will help employees during the cost of living crisis. People are feeling the pinch in their pay packets and it’s important that employers do what they can to maintain their employees’ standard of living.
Our research shows that only 25% of people have received a pay rise above or equal to the 10% inflation rate in the past six months*, leaving many in a worse financial situation than they were in this time last year. Data from jobs posted on Reed.co.uk tells a similar story. The average weighted salary increased by 6% compared to the previous year, which is below the inflation rate.
Not only does increasing salaries help employees cope with the ongoing cost of living crisis, but it demonstrates that their employer cares about them and values their work and contributions. Of the workers that did not receive a pay rise last year, 24% said that this made them feel undervalued by their employer and a further 20% said it left them feeling anxious about their financial situation*.
It’s clear and understandable that salary is at the forefront of workers’ minds – and it’s only growing in importance given the current economic climate. Last year, when we asked people why they were looking for a new job, 29% of respondents cited they were looking for a higher salary***, but now this number has jumped up seven percentage points to 36%*. Increasing your employees’ salaries in line with or above the rate of inflation will undoubtedly be appreciated by your employees and help to support them during this tricky time.
Consider incorporating financial benefits into your benefits package
If your business isn’t in the financial situation to be able to offer company-wide pay rises, you can consider incorporating financial benefits into your existing benefits package. Perks such as private healthcare and performance-related bonuses have the power to attract candidates and will encourage them to stay as well.
In fact, they are so influential that seven in ten workers (69%) say that they would only or are much more likely to apply for roles that list the financial benefits on the job advert*. By not offering these perks, and not shouting about them in your job ads and employer branding, employers may be missing out on opportunities to hire.
A lot of businesses are turning to financial benefits as a way to support their employees given the current crisis. Over a third (35%) of businesses reported having already introduced financial benefits, with a further quarter planning to**. The top financial benefits that businesses are looking to implement are:
- Performance-related bonuses (17%)
- Free food and drink (17%)
- Financial wellbeing education and workshops (16%)
- Private healthcare (16%)
- Travel expenses paid for by the company (14%)
Employers are already recognising the positive impact that introducing financial perks has had on their organisations. In our latest research, 39% of businesses cited increased employee engagement, 33% recorded reduced absenteeism, and 33% reported an improved employee retention rate. In addition to the benefit that employers are experiencing, employees that receive financial benefits report feeling more valued, more motivated, and more secure about their financial wellbeing leading to greater satisfaction.
Provide benefits that support wellbeing and work-life balance
Just as the cost of living crisis is affecting workers, it’s a concern for businesses too with some worried that they may not even survive the crisis. For those who are not in the situation to offer increased salaries or financial benefits, it will be reassuring to hear that all is not lost when it comes to talent acquisition.
People understand the fact that businesses can’t necessarily afford to throw money at the problem right now, and many are still actively looking for perks that support their lifestyle and wellbeing. Although a low salary is the main motivation for someone to leave their role (43%), an insufficient work-life balance (39%), not feeling valued and respected (37%) and a toxic work culture (36%) are not far behind*.
People still want perks that allow them to live happy and balanced lives – even to the extent that over a third (36%) of UK workers would actually change jobs for a lower salary if it meant they would have a four-day working week and over a quarter (25%) would give up a higher salary for more flexibility*. The fact that people would take a lower salary in order to benefit from these perks shows their appeal and are worth considering in order to attract new talent and support your current workforce.
Employees want to feel supported
The bottom line is that employees want to feel supported by their employer right now and know that they are taking steps where they can to help. Although offering salaries above the line of inflation is the most straightforward way to make an impact on your current employees and attract new talent to your business, it’s not the only way.
Being transparent with your staff about how you plan to deal with the financial crisis, and how you plan to recover will build trust and loyalty in the workplace. On top of this, the implementation of benefits that support financial wellbeing and work-life balance will entice top talent to your organisation, and make your company a tough one for current employees to leave.
*This online survey was conducted by Atomik Research and consisted of 2,000 adults in the UK. This survey took place between 6 – 9 February 2023. Atomik Research is an independent creative market research agency that employs MRS-certified researchers and abides to MRS code.
**This online survey was conducted by Atomik Research and consisted of 251 employees with hiring responsibilities in the UK. The research fieldwork took place between 6 – 9 February 2023.
***This online survey was conducted by Atomik Research and consisted of 2,004 adults in the UK (95% were employed and 5% were unemployed). This survey took place between the 4th – 11th February 2022.
