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How HR professionals can help during the cost-of-living crisis

Charles Cotton, CIPD Senior Adviser for Reward

The great employee and employer squeeze

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

There have been extensive reports covering how a range of employers, from chip shops to care homes, are dealing with spiralling costs, limiting the aid they can offer just as workers are feeling the pinch of skyrocketing living costs.

While the Government’s energy support package 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 8.8% in the year to September 2022, while groceries have increased by 14.6%, and transport costs have gone up by 10.9% over this period.

Despite the price rises endured by many employers, the CIPD is still encouraging HR professionals to help their organisations explore the various steps they could take to assist their people. 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, and housing and utilities. So, it makes sense for employers to look at what it can do to reduce the cost of these.

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
  • providing interest-free loans to buy public transport season-tickets, bikes, or cycles
  • offering secure places to store cycles and bikes.
In terms of helping staff with the cost of groceries, possible initiatives include:
  • free or subsidised meals and drinks
  • providing fridges for people to store their packed lunches
  • workplace cooking facilities
  • healthy snacks
  • shopping discounts.
With housing, things employers can do include:
  • providing information and guidance on employees’ legal rights regarding housing
  • giving paid leave to find a home and move in
  • offering rental deposit schemes
  • giving accommodation and rent subsidies
  • 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
  • emergency childcare support
  • maternity loans
  • guidance for staff trying to access the government’s tax-free childcare schemes.

However, there are tax implications in providing some of these benefits, so HR teams should assess these when considering introducing new financial wellbeing benefits.

Other financial wellbeing support

In addition, CIPD research finds that many employers now offer employees:
  • 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
  • a bonus to help workers deal with the impact of the cost-of-living crisis
  • 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, as well as helping to break down the stigma that may exist in the workplace about admitting money worries.

In addition, workplaces can signpost those with money worries to internal and external sources of information and guidance, such as the Employee Assistance Programme or the Money and Pensions Service’s Money Helper.

The importance of language

When it comes to talking to people about money issues, language is crucial. 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 talking to them 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. For example, in the current circumstances, many middle or higher paid staff might be tempted to opt out of pension saving. So, it’s important for HR teams to highlight the potential downsides of doing this, given that in the future, some of them might not be able to afford to retire from the company.

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.

With most employers predicting that the financial wellbeing of their workers will worsen, it’s not surprising that this issue is being discussed more by most employers. However, given the increase in costs for employers, it’s going to be difficult for organisations on their own to try and mitigate the big squeeze on living standards. 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. That’s why government also had an important role to play.

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