The Cost of Living Crisis and what it means for employers and recruiters

TotalJobs found that 37% of workers are considering changing jobs for a higher paying salary than their previous role to cover higher costs, as well as benefits and perks that allow them to maintain lifestyle choices.

In the last few months, the UK has been seeing news stories each day relating to the rising cost of living. This has been described as the UK experiencing a ‘Cost of Living Crisis’. What this means is an increase in the costs of living including the price of energy, food, clothing and other household items, whilst wages are significantly falling behind. Inflation has hit the highest rate in 40 years, reaching 9.1% in April 2022. Consequently, banks are upping interest base rates and National Insurance is increasing, putting a significant number of people in the UK under financial pressure.

What does this mean for employers?

It’s safe to assume that many employees want/expect a pay rise at least in line with inflation so they feel as though they aren’t on the back foot. Whilst that’s achievable for some businesses, that’s not necessarily the case for many businesses, so how can employers support their workforce whilst keeping afloat? Well, there may be other ways employers can help by thinking beyond the immediate issue of salaries.

There are multiple schemes available that allow businesses to help offer their employees benefits that can help ease their financial load without having to implement a blanket wage increase in line with inflation.

  • Season ticket loan – This is one of the most common benefits offered by companies that aims to help employees where the cost of commuting is a major budget item. It is an interest-free loan for employees to cover the cost of traveling to and from the workplace via modes such as tram, rail, bus, etc. Some schemes can also be used to cover parking costs too. The loan repayments are paid monthly through the employee’s net pay over a set period.
  • Cycle-to-work scheme – This scheme can help employees cycle their commute to cut costs on pricey transport. It allows employees to save 26 to 40% on their bikes and accessories. The employee has no upfront payment, and the monthly payments are taken tax efficiently from the employee’s salary by their employer.
  • Employee Discount Scheme – This is a bit of a different tactic but these schemes offer employees discounts for products and services that they are likely to buy regularly. For example, one company called PerkBox offers discounts at Sainsbury’s and M&S.

It’s important for employers to be aware of how this crisis is affecting their workforce. For companies who have introduced a working from home strategy, there will be cost benefits associated with reducing the need for office space etc however, this cost saving could be passed on to the employees so companies could offer a proportion of their savings to employees to help with the increasing cost of energy and food whilst they work. Alternatively, employers could help employees manage their finances more effectively by offering access to support services and financial training. There are lots of organisations and training providers offering such support and these could prove to be very helpful to some employees. This type of approach needs to be handled with extreme care to avoid any suggestion that employees are being judged or criticised.

In our opinion, the most important effort companies can make is to look after their employees mental wellbeing. The British Medical Journal is reporting a serious impact on people’s mental health as a result of the cost of living crisis. A YouGov survey shows that 55% of British people feel their health has been negatively affected by the rising costs, with a quarter having a mental health diagnosis from a doctor or medical professional as a result. Supporting employees mental wellbeing can look different for everyone, it could be organising exercise class, lunchtime running/walking clubs, lunch & learns around personal wellbeing, having a hub of mental health resources on internal platforms or offering corporate memberships for gyms/wellbeing programmes e.g. Headspace, a meditation app offers Headspace For Work which allows employees to have access to hundreds of meditations, wellbeing and mental health resources.

What is the impact on recruitment?

Recruitive found that 17% of workers had been forced to find second jobs to make ends meet, shockingly, this figure rises to 20% of essential workers. They estimate that more than 700,000 care workers could leave the profession in the next year. CV-Library similarly reports that 75.1% of UK professionals are now considering a new job purely because of the cost of living and rising inflation costs they’re facing. They further found, through analysis of their live vacancies, that salaries were not keeping track with inflation and in fact, many industries were offering lower wages than the previous year. It’s clear why there is a desire to make a change in career, people feel as though they aren’t being offered the best they can be and so are seeking this elsewhere.

TotalJobs found that 37% of workers are considering changing jobs for a higher paying salary than their previous role to cover higher costs, as well as benefits and perks that allow them to maintain lifestyle choices.

How can recruitment agencies help?

At THE Agency, we always have our finger on the pulse on industry news as well as with our candidates and temp and contacted employees. We can help to ease the load for our clients by providing resources to help keep them up to date with whats going on along with our expert advice. We also have an open line of communication with everyone we work with and we can facilitate communication between employer and employee as well as assisting with negotiating both ways.

The cost of living crisis is clearly not going anywhere soon so whatever we can do to help each other is crucial to the performance of our workforce. If direct financial help isn’t possible there are always other ways in supporting employees. In the current recruitment and employment landscape getting creative is critical.