28 November 2023
Reflections from the Green Park Global Talent Conference
Inflation at 10.1%. Rail fares set to increase. The price of energy at record highs. No wonder 87% of UK adults have reported an increase in the cost of living. As higher expenses bite, employees’ stress levels are spiking, while their wellbeing plummets. Employers need to support their people – but what assistance is most effective? We’ll be looking at some of the actions they can take to help workers feeling the pinch. It all starts with awareness. So, what is the cost of living crisis?
What is the cost of living crisis?
Rising costs are everywhere, causing outgoings to explode. As inflation outstrips salaries and benefits, there’s a significant fall in disposal income. This is the cost of living crisis, and it’s been growing since late 2021. The poorest households are struggling to keep their heads above the water, as expenses such as rent, mortgages, food and bills consume an ever greater proportion of wages. Although the government has introduced some measures to offset the problem, including household support for energy bills, inflation is running rampant. It’s predicted that real disposal income is set to fall by 2.2% in 2022/2023, the biggest drop in living standards since the mid-1950s, according to Statista.
How the cost of living crisis affects employees
With 9 in 10 people affected by rising costs, very few employees have been left unscathed. The Office of National Statistics (ONS) reports some troubling trends, with payment of bills, loans, rent and mortgages becoming increasingly difficult for many.
The impact of money worries on wellbeing can’t be under-estimated. In a recent study by the Money & Mental Health Policy Institute, 59% of people said that rising prices had had a negative impact on their mental health. Over half (54%) had felt anxious in the preceding months due to the rise in the cost of living, with one in three (34%) feeling depressed. Alarmingly, the research found that 21% have felt unable to cope and 18% have felt desperate.
Unsurprisingly, the cost of living looms largest for the poorest employees. With worse-off households less able to absorb higher costs, they experience greater financial strain. In the workplace, this translates into an invisible and widening gap in social mobility, as less well-off employees find themselves excluded from certain opportunities. The costs of commuting, work social occasions and energy while home-working can all tip employees into financial and emotional gloom.
The problem is compounded by the stigma around poor financial wellbeing, with workers unable or unwilling to discuss their situation. Isolated and vulnerable, they’re more likely to experience poor mental health and less able to give their best at work. After all, how many of us can concentrate when we’re anxious and preoccupied? Those in straitened circumstances are less productive, absent more often and may come dangerously close to breaking point.
How to support employees
The first step to supporting employees is spotting there’s a problem. As mentioned earlier, many people are reluctant to admit they’re struggling due to shame, pride or discretion. Therefore, watch for potential warning signs: unusual requests for overtime; avoiding work social events involving outlay; requests to work from home (to reduce commuting costs); or spending more time in the office (to reduce energy costs at home). Better still, provide support to help employees stay afloat.
Thoughtful, workable solutions won’t neutralise the cost of living crisis, but they can make a huge difference. The most obvious one is pay: are employees getting a fair, living wage? Below are some other ways you can shield your team from rocketing costs. Remember that even small gestures mean belts can be untightened by a notch.
As so often, looking after others means showing them they’re not alone. With a supportive, inclusive environment, employees will feel able to seek help before things get desperate. Make sure they feel comfortable opening up and know what channels are available. See that managers are trained to give the best support possible. Foster trust, inclusion, understanding and clear communication. In an increasingly unaffordable world, compassion costs nothing.
If you’d like help building this kind of culture, Green Park can help. For expert advice and guidance, contact our Diversity, Inclusion, Consultancy & Ethics Consultancy at email@example.com.