Cost Of Living Crisis: What Can I Reasonably Expect As An Employee?
Covid restrictions may be a distant, unhappy memory, but the economic effects of the global pandemic are still very much being felt today. The cost of living crisis is putting huge pressure on wages, resulting in a big fall in real disposable incomes. Inflation has hit double figures in recent months, while the energy price cap has risen by a staggering 54% due to increases in the wholesale price of energy and the rising cost of oil. Add to this disruptions to global supply chains caused by pandemic lockdowns and the Russian invasion of Ukraine and you have the perfect storm of conditions to create a deep and far-reaching cost of living crisis and a looming recession.
Employees may naturally look to their employers for financial help during these difficult times. But for employers, many of whom are still dealing with the pandemic fallout plus rising energy costs and wholesale price increases, pay rises may not always be viable. Prices may have already risen to cover increasing costs and another price rise to help cover a bigger wage bill may be a step too far for many of their clientele.
But can employers really afford to do nothing? The Great Resignation sparked by the Covid-19 pandemic has shown that, in fact, retaining talent is more important than ever before. Also dubbed The Big Quit, the Great Resignation has seen millions worldwide quit their jobs in the wake of the pandemic. A lack of pay increases, a shift in priorities and a feeling of being undervalued are among the main reasons cited for a change in employment, which in many cases has resulted in an entire career change.
Experts predict the Great Resignation could continue into 2023, with pay rise refusals a big contributing factor. Losing trained and experienced staff, particularly in higher numbers, can hit a business hard. Recruitment and training can be both costly and time-consuming, and you need to be able to offer an attractive wage and package of benefits in order to attract top talent in the first place.
Clearly, employers will need to do something to support their employees in this turbulent economic climate. Few businesses are likely to be able to offer pay increases to match the rate of inflation. The increase in strike action at the end of 2022 and the beginning of 2023 is a testament to this. Employers will need to assess pay structures and see if any upward movements can be made. Attempting to offer some form of increase, alongside other benefits, can help to make employees feel appreciated.
If wage increases are not forthcoming, businesses will need to look at other ways to incentivise and retain employees. One possibility is a one-off cost of living crisis payment. According to the Office for National Statistics (ONS), around 5.5% of businesses with 250 or more employees have offered such a payout to workers during the crisis . Introducing more flexible working practices can be another positive way to attract and retain top talent.
Flexible working practices are not only popular with employees, but they can also help to reduce travel costs or fuel consumption too. Asking employees to work from home can also allow them to claim tax relief on water, electricity and gas bills too. Employers will also need to look at the package of benefits offered, including childcare vouchers, gym memberships and subsidised travel arrangements. They may seem like small incentives but can often mean a lot to employees. Benefits packages should be reviewed regularly to ensure they are still relevant and working hard for employees.
Employers also need to look beyond financial incentives and rewards. Work needs to be done to ensure workers' mental health is looked after during the crisis. Managers should be properly trained to support staff, while a strong communications strategy can help to foster an open and productive dialogue and an environment in which staff feel heard, supported and valued.