Helping employees navigate the cost-of-living crisis!

The phrase "cost of living crisis" has been a constant topic in conversations, media, and internal reflections. If it's on your mind, it's likely on the mind’s of your employees too. As costs rise, employees' anxieties about their personal finances, earnings, and job security also increase. With budgeting, investing, and saving becoming more critical than ever, focusing on work and maintaining productivity can take a back seat. As employers, you play a crucial role in providing stability amid this chaos by offering wellbeing initiatives to support your employees.  

“The "cost of living" refers to the expenses people must cover to meet their everyday needs. “

This becomes a growing problem when incomes (particularly wages) and revenues fail to keep up. For employers, this might mean facing rent hikes, sourcing new suppliers, or even considering layoffs. For employees, it means living paycheck to paycheck with heightened concerns about job security. By recognising these challenges, employers can collaborate with employees to develop strategies to navigate this crisis effectively.

Why should employers care?  

• 70% of employees worry about or spend time dealing with money at work - irrespective of their position or level of income. (Gallagher Employee Financial Confidence Report).

• People who are financially stressed are 10 times more likely to not finish daily work tasks, 9 times more likely to have troubled relationships with coworkers, and 2 times more likely to be looking for a new job (Salary Finance’s 2nd Annual Report 2020).

• Those with money worries are 2.3 times more likely to be looking for another job  

• Employees with money worries spend almost five working hours per week dealing with personal money issues during the workday compared to one hour spent by those without financial worries.

The cost of the crisis

Without proper intervention, the crisis will impact both yourself and your employees. According to a survey conducted by software research site Capterra, they implore that “companies must see the value in investing in their employees beyond their salaries, which could help in their productivity during remote work and lessen their financial burden at some level,”.  

Impact on Employees:

• Reduced savings: Less disposable income to save for emergencies, retirement or long term financial goals.

• Reliance on multiple jobs: To cope with the rising costs, employees may have to take on multiple jobs or side hustles that can lead to burnout and lack of work life balance.

• Reduced quality of life: Employees may need to relocate to less favorable neighborhoods and forgo leisure activities

• Mental health strain: Financial stress can result in issues such as anxiety and depression, impacting overall wellbeing.

• Delayed milestones: Buying a home, starting a family or enrolling in higher education is less of a priority.  

• Lack of financial security: The combination of the above factors makes it difficult to recover from unexpected expenses and can make the thought of rent increases and job loss feel imminent and overwhelming.

Impact on Employers  

• Increased Turnover: Employees seeking better financial stability may leave for higher-paying jobs, leading to higher turnover rates and the associated costs of recruiting and training new hires.

• Loss in productivity: Without support, employees may struggle to focus during work hours with looming worries about their financial health.

• Damage to Employer Brand: A lack of support for employees during financial crises can damage an employer's reputation, making it harder to attract top talent

• Workplace Safety: Financial stress can lead to fatigue and distractions, potentially compromising workplace safety and leading to accidents or injuries.

Employers can take action

A recent Committee for Economic Development of Australia report concludes that returns on investment are high for employers that invest in mental health, with such employers seeing increased productivity, reduced presenteeism and more engaged staff. By offering benefits, you offer additional security to your employees so they can focus on work, not their finances.

What you can do

In the face of the "cost of living crisis," employers hold a pivotal role in mitigating its impact on their workforce. As the strain on personal finances mounts, employees' concerns over job security and financial stability grow, directly affecting productivity and wellbeing. By investing in financial education, offering flexible work arrangements, ensuring fair compensation, and promoting work-life balance, employers not only alleviate immediate financial stress but also cultivate a more engaged and resilient workforce. Ultimately, by prioritising employee wellbeing, employers can navigate these turbulent times with empathy and effectiveness, fostering a workplace where both productivity and morale thrive.

• Flexible work arrangements: Offering hybrid work environments reduces travel costs such as public transport and petrol, and allows for transit time to be supplemented with life admin that usually take a back seat.  

• Pay fairly: Offer wages that reflect workload and experience. In a cost-of-living crisis, job loyalty falls below financial security and could result in resignations.  

• Accurate, reliable payroll: This is a basic necessity, as unreliable payroll can put significant strain on the mental and financial wellbeing of your employees. Ensure payroll is completed accurately and on time.  

• Financial wellbeing assistance and guidance: Offering education to improve the financial health and literacy of your employees improves focus and relieves stress. By providing seminars, workshops and 1 on 1 financial consultations, you are able to provide individuals with personalised help. From seminars on basic budgeting to investing, there are endless opportunities to support your employees with expert-led education.  

• Provide discounts and benefits: With demand from workers for businesses to front the costs of travel expenses and bills associated with working from home, it is clear that employees are seeking additional financial support. This could be in the form of a lunch provided once a week, providing health checks and flu shots, offering gym memberships and coupons to support daily spending. Lightening the load, even a little, shows great care for the wellbeing of your employees.  

Finance makes up a big slice of the pie when it comes to wellbeing. Recognising this and providing services to support employees through hardship makes you not only an employer of choice but also one that employees will stick with.