CIPD Voice On…cost-of-living support, by Charles Cotton, CIPD’s Senior Adviser, Performance and Reward 

The great employee and employer squeeze 

While media coverage since the start of 2022 has been dominated by the impact of the cost-of-living crisis on living standards, it’s only relatively recently that the press has started to highlight the cost-of-doing-business crisis. 

There have been extensive press reports covering how firms in such diverse sectors as chip shops, schools, leisure centres, pubs, corner shops, nightclubs, steel makers, and ceramic manufacturers, etc, are all coping with spiralling costs. Just as employees are feeling the pinch of skyrocketing living costs, so too are employers being limited in the aid they can offer. 

While the energy support package recently announced by the UK Government for households and employers is welcome, prices will still rise in the coming months, albeit probably not now to the levels once predicted. Nor will the package make up for the fact that inflation (as measured by CPIH) has already jumped by 8.6% in the 12 months to August. 

Despite the cost increases already endured by many employers, the CIPD is still encouraging HR professionals to help their organisations explore what steps they can take to assist their people over this difficult period. Research by the Joseph Rowntree Foundation finds that as a proportion of their budget, low-waged households spend a lot of their earnings on commuting, food and leisure, childcare, housing and utilities (see the chart below). So, employers should focus in these areas.

Benefits that can help cut living costs but beware of tax implications 

Potential options for cutting commuting costs include but are not limited to:  

• letting people work from home more often (if their jobs allow it) 
• allowing people who travel by public transport to come to work when it’s cheaper (after peak hours) 
• providing a free mini-bus or coach to transport people to work 
• facilitating carpools 
• providing interest-free loans to buy public transport season-tickets, bikes, or cycles 
• joining the government backed ‘cycle to work scheme’ 
• offering secure places to store cycles and bikes 
• paying staff travel expenses as quickly as possible 
• providing a credit card for travel expenses. 

In terms of helping staff with the cost of food, possible initiatives include: 

• free or subsidised meals and drinks 
• retail discounts 
• providing fridges for people to store a packed lunch 
• luncheon vouchers 
• workplace cooking facilities 
• healthy snacks. 

With housing, things employers can do include:  

• offering rental deposit schemes 
• giving accommodation and rent subsidies 
• providing information and guidance on employees’ legal rights regarding housing 
• giving paid leave to move home 
• signposting ways of reducing energy use as well as offering benefits that cut energy consumption. 

Regarding childcare, employers could consider:  

• offering flexible working 
• giving paid leave for caring responsibilities 
• subsidised childcare 
• emergency childcare support 
• guidance for staff trying to access the government’s tax-free childcare schemes 
• maternity loans 
• children’s wear discounts. 

However, it’s important to flag that there are tax implications in providing some of these benefits, such as providing employees with a works bus, vouchers or meals, etc. So, HR teams must assess the tax consequences when their workplaces are considering introducing new financial wellbeing benefits. 

Other financial wellbeing support 

In addition, CIPD research finds that many employers now offer employees:  

• occupational sick pay to enable them to take time off when ill without risking their livelihood 
• crisis loans to help them deal with unexpected financial shocks 
• the option to choose how often they’re paid to help them better manage their money 
• information about financial scams to help them protect their finances 
• options for saving regularly through payroll (to create a ‘rainy-day fund’ and to cope with unexpected bills) 
• financial awareness programmes that explore a variety of topics, such as the relationship between higher pay and universal credit or child benefit, and breaking down stigma that may exist in the workplace about admitting your financial concerns. 

In addition, employers can signpost those with money worries to external sources of information and guidance, such as the Money and Pensions Service’s Money Helper. 

Many organisations are also considering offering staff a bonus to deal with the impact of the cost-of-living crisis. However, for some low-wage employees in receipt of Universal Credit or Tax Credits, a one-off or lump sum bonus could interfere with their benefits payments and leave them struggling to budget and make ends meet. 

To make sure this doesn’t inadvertently cause extra undue stress or financial hardship, HR teams should consider what other options their organisation could offer, including:  

• offering gift vouchers in lieu of cash payments (although even this comes with tax implications) 
• giving a cost-of-living pay rise, or spreading a one-off payment over several months so that it acts like a temporary pay rise. 

The importance of language 

When it comes to talking to people about money issues, language is important. It’s very likely that many low-waged workers are already used to being frugal with their money, so it’s important to recognise this when communicating to workers about the various ways that they can cut their energy use or reduce their grocery bills. 

However, for many middle-earners and higher-earners, rising prices and interest rates could have come as a nasty surprise, so they might need information and guidance about budgeting as well as various tips about the ways they can reduce how much they spend on essential and non-essential items. 

How to pay a liveable wage 

Paying a liveable wage is also important. However, the only way that this can be done sustainably is by improved productivity. This doesn’t mean employees having to work harder, but instead smarter. HR teams can help their employers raise productivity by reviewing how jobs, tasks and workplaces are designed to see where improvements can be made.  

For instance, for the organisation to charge a premium for its product, it will need to improve its quality. This has implications for how people are trained and supported in the new ways of work, how jobs and tasks are redesigned and regraded, how salary rates and structures are revaluated, and how skills and experience are valued, etc.  

Even if there wasn’t a cost-of-doing-business crisis, it would be unfair to expect HR teams and their organisations to deal solely with such living costs as accommodation, childcare or transport as that’s beyond their control. However, with the double-whammy of rising prices for both workers and employers, it’s going to be difficult for firms on their own to try and mitigate the big squeeze on living standards, other parties have a role to play, such as government. 

For more information on how HR teams can support workers during the cost-of-living crisis, please visit our cost-of-living hub.