Charles Cotton, Senior Policy Advisor on performance and reward, explores cost-of-living concerns for UK employers in light of Talk Money Week 2023.
Comparing the results from the CIPD’s Autumn 2023 Labour Market Outlook which publishes on Monday 13 November, with the Autumn 2022 report, reveals that the cost-of-living crisis has become less of a workplace concern in the UK. In 2022, 42% of UK employers surveyed were worried about the financial wellbeing of their staff. Today, just 29% of employers are worried.
All sectors in the UK have seen a drop in concerned employers. The UK’s private sector has seen a fall in concerned employers from 39% in 2022 to 27% in 2023, and the public sector a drop from 46% to 34%. In the voluntary sector, we’ve seen a comparative fall from 56% to 36%.
We’ve meanwhile seen a rise in the proportion of employers who are confident that they’ll be able to support their employees’ financial wellbeing over the next 12 months (from 27% to 33%).
One explanation for the drop in concern and the rise in confidence is that inflation has been falling. However, that is misplaced. While inflation has been dropping, this doesn't mean things have become cheaper. It's just that they're not now going up in price as fast. While pay for lower earners has been increasing rapidly, the lower paid also face higher inflation rates. So, employers still need to be concerned about the financial wellbeing of their low-waged workers.
Paying people more is the most common response to the cost-of-living crisis
As the table below highlights, most employers have either increased wages (38%) or introduced more flexible working (29%) as a way of supporting their people through the cost-of-living crisis. But a number have taken other measures such as introducing lump sums, or improving staff benefits.
UK employers have provided more cost-of-living support than first anticipated
The table below also compares what employers predicted they would do in 2023 with what happened. Highlighting that sky-high inflation forced more employers to increase wages, pay lump sums, and introduce more flexible working.
Most UK employers plan to increase wages as part of their cost-of-living support
Looking ahead, 28% of employers have plans to raise wages between now and Autumn 2024, which is lower than the 38% that did so between Autumn 2022 and Autumn 2023.
This fall reflects that only 35% of employers think the financial situation of their staff will worsen over the next 12 months, compared to the 73% last year that thought this. However, should inflation fall more slowly than expected, more employers will need to help their employees.
Here are some popular things that employers are also doing to provide further financial wellbeing support:
- Asking workers for their feedback (at least once a year) on their pay and benefits (47%).
- Encouraging employees to talk about their money concerns in the workplace (37%).
- Actively measuring staff understanding about the pay and benefits on offer at least annually (36%).
- Targeting communications about employee benefits and financial education to specific employee groups (36%).
- Supporting and developing line managers so they can talk to their people about financial wellbeing (35%).
- Asking workers about their financial wellbeing at least annually (32%).
There’s not much change between the proportion of workplaces that did this in 2023 and 2022. The largest rise is in the percentage of employers that now support and develop line managers to talk about financial wellbeing with staff (from 31% to 35%).
How can employers make a difference?
The CIPD recommends that employers:
- focus on paying a fair and liveable wage
- offer benefits that support financial wellbeing
- provide opportunities for in-work progression
- bring all these together as a policy.
Our research finds that 36% of employers have already adopted a policy (up on 32% last year), while an extra 6% plan to create one. The proportion of UK employers who operate internationally with such a policy is even higher at 45%. Not only can such policies help tackle poor financial wellbeing, they can also help to better attract staff. This is especially important at a time when many employers are struggling to fill hard-to-fill vacancies.