One in eight workers said they would struggle to afford the basics in the next six months, according to polling by the Trades Union Congress (TUC).
The organisation warned millions of low-income workers will face increased struggles this April when UC falls behind the cost of living as energy bills and taxes rise.
It said the rise in UC recipients to 2.3 million workers has been driven by working households being pushed into financial hardship during COVID.
How HR can tackle in-work poverty:
Soaring cost of living prompts calls for financial support for employees
Financial education is now a necessity
In-work poverty: All work and no pay
The analysis is published following an increase of the energy bill price cap last week and comments from Bank of England governor Andrew Bailey who advised workers not to ask for big pay rises to help stop prices rising out of control.
Bailey, who earns close to £600,000 a year, made the comments a day after the Bank raised interest rates to 0.5%
Reacting to the news on Twitter, CIPD CEO Peter Cheese said wages will become a challenging issue for HR.
He said: “[It’s a] tough juggling act that HR is in the middle of: balancing people’s concerns about the growing wage and cost of living gap with trying to contain overall business costs and all at a time of big recruitment challenges. A big theme for shared dialogue.”
Speaking to HR magazine, Charles Cotton, senior performance and reward adviser at the CIPD, said HR can still help to ease employee concerns around wages.
He said: "While HR teams can’t do much about the drivers increasing the cost of living, there are several ways they can help support their workforce’s financial wellbeing.
“This includes highlighting sources of useful information to employees and being sympathetic to the challenges that many of them face, to providing workplace financial wellbeing benefits that give workers a safety net and paying a fair and liveable wage."
TUC analysis found the basic value of UC is now lower than at the start of the pandemic as it has failed to keep up with inflation, estimating a £12 a month drop in real terms.
It recommended an increase to UC to 80% of the real Living Wage, £9.90 in UK and £11.05 in London, and government to boost the minimum wage to at least £10 per hour.
Liz Sebag-Montefiore, director and co-founder of consultancy 10eighty, said HR needs to consult, communicate and reassure employees that their wellbeing is paramount when having conversations around pay.
Speaking to HR magazine, she said: "HR can help by running digital and budgeting skills sessions allowing employees to create a spending plan for their money and help to keep them out of dept. HR can also help by providing access to all information about advice lines to people who can help solve any problems they might have."
