Soaring cost of living prompts calls for financial support for employees

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Yesterday’s eye-watering inflation figures – showing the biggest rise in the cost of living for nearly 10 years – have seen renewed calls for employers to do more to support the financial wellbeing of their staff.

The consumer prices index now stands at 4.2%. This is up from the 3.1% recorded in the year to September and is more than twice what the Bank of England was targeting. It means the average employee will be more than £1,000 worse off each year, according to the Resolution Foundation.

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Carole O’Neil, HR & training partner at engineering consultancy Cundall, told HR magazine: “Financial wellbeing has been rising up our agenda for the last few years, but the latest inflation figures are really putting this into perspective now.

“We already have quite a large programme of financial wellbeing support – everything from graduates getting a financial wellbeing briefing when they join, to having retained financial advisers, and advice for those thinking about retiring. But I do think the pressure on cost of living will see us survey staff to see what more we can do."

She added: "Traditionally offering vouchers and providing benefits that make people’s money stretch further hasn’t always had much of an uptake, but I suspect these sorts of benefits may now be resurrected.”

According to the Institute for Fiscal Studies, inflation is so high that an employee earning £30,000 in April last year would have had to receive a 7.1% pay rise to maintain the same standard of living now.

It also notes 10% of households in the bottom decile of earnings spend more than 12% of their income on gas and electricity – and the cost of energy alone is expected to rise to by 19% when next April’s fuel cap is announced. 

Trying to put more cash in people’s pockets is one quick answer. Yesterday, supermarket chain Lidl announced it would be spending £18 million boosting the wages of 21,000 staff by paying them up to £12.25 per hour for those who work in London. The pay rise is an inflation-beating 6% – and is more than 60p per hour more than the National Living Wage.

Also boosting pay is restaurant and hospitality chain Green & Fortune. Yesterday it also announced that from 1 December it would be paying its staff more than the London Living Wage – by paying above £12 per hour.

Speaking exclusively to HR magazine Green & Fortune CEO John Nugent said: “When we opened back up after lockdown we had a serious think about things, including how we look after our people. In-work poverty should not be something any CEO is comfortable with."

He added: "We’ve known inflation is likely to rise, and if we expect our staff to be smart, and happy, we need to ensure we are doing our  bit by boosting their pay.”

For some staff, the pay rise will represent a 15% rise in the salary. Nugent said: “Cost of living must be a source of anxiety for some. We felt it was our responsibility to address it.”

But some think employers could still be doing more. Research by Nudge finds half of employees worry about money at least once a week, but 66% of employees feel their organisation provides little or no support for their financial wellbeing.