HOW TO SUPPORT EMPLOYEES STRUGGLING WITH THE COST OF LIVING
The cost-of-living crisis has impacted all areas of our lives, with some households struggling to manage rising fuel and food costs. Tough decisions are being made that affect not only your employees’ bank balance but also their physical and mental health.
What has been the most significant factor in the rising cost of living?
There are a variety of factors that have contributed to the rising cost of living during 2022. Here in the UK, two significant elements have reduced the actual value of our wages: soaring energy prices and rising inflation.
The monthly pay packet isn’t stretching as far as it did in 2021. Although the average wage increased by 4.7% from April to June, the rise in inflation outpaced growth, with the real value of the average salary decreasing by 3%.
The energy price cap increased by £693 in April 2022, and for households across the country, the average bill rose from £1,277 to £1,971 per year. Those billed via a payment meter were hit even harder, with a £708 increase from £1,309 to £2,017.
In addition to household expenses, the RAC confirmed that the average cost of filling a typical family car with petrol has surpassed £100 for the first time. DJS Research ran a poll with 2000 UK motorists, and 79% viewed their vehicle as an essential part of their lives, increasing to 89% for those living in the countryside.
The RAC also published research in 2020 showing that 68% of workers use their cars to commute to the office. Not only are your employees’ wages not going as far, but it also costs them more to get to work.
How does the UK compare to other nations?
When we look at the cost of living by country and compare the UK to other nations, we can see that the British government has taken various steps to assist. As outlined in a BBC article, this includes a £150 council tax rebate, £400 energy grant, and £3000 energy price cap.
The £150 council tax energy rebate was announced in February 2022 and credited to the accounts of those living in council tax bands A to D. Next came the cost-of-living payments, two payments totalling £650 for eight million low-income households.
All UK households will receive a non-repayable sum of £400 to assist with rising energy bills. This will be paid in monthly instalments of £66 in October and November, followed by £67 between December and March.
Finally, as of 31 March 2022, energy bills across the UK have been capped at £3000 a year, which will remain until March 2024. This energy price guarantee was enacted on 1st October as part of Ofgem’s remit to regulate consumer bills.
When is the rise predicted to slow?
The UK government has taken steps to assist with the cost-of-living crisis, but it could be some time before we feel the effects. Bank of England governor, Andrew Bailey, believes the situation is unlikely to stabilise until the end of 2023.
With the rise of inflation and higher energy costs, the real value of our take-home pay has been reduced. While the new price guarantee caps prices at £3000, this is over twice as high as winter 2021, when the average bill was £1,277, which could leave many more people struggling.
A call for Financial Education
We’ve recently seen a rise in organisations bringing financial education into their business to help their employees better manage their money. You can boost their learning by offering our Financial Wellbeing by Wagestream service. This financial wellbeing app allows employees to access wage withdrawals ahead of payday, track their earnings as they work, build up savings direct from their pay, chat with qualified financial coaches, check their financial health score, and more - all in one app, with no change to payroll.
Businesses can also take steps through other means of financial support to safeguard employees' wellbeing with Financial Wellbeing by Salary Finance. Solutions include affordable borrowing using salary deduction, financial education, tools to help monitor spending and form good saving habits, and debt consolidation with less interest, making everything easier to cope with.
Make Salaries Stretch Further with Cost-Effective & Sustainable Employee Benefits
Here at Sodexo, we empower our business clients to give more for less, and we have a host of award-winning employee benefits available to help achieve this goal.
Our employee discounts platform gives your people savings on everyday essentials and treats or experiences your employees, and their families can enjoy. Available on the go, employees reap the savings when they purchase discounted voucher codes from a vast range of high street and high-end retailers, online and in-store.
“We’ve been with Sodexo for over three years; we use their cycle scheme and childcare vouchers. We also offer discounts, reloadable cards, and holidays – they are really popular with our employees.” Michelle Lynch, Head of HR at Mass
Our prepaid employee cashback card is another way to offer significant financial support to your employees. It’s also incredibly versatile since it can be provided as an employee benefit and incorporated into your reward and recognition strategy. Once it’s in the hands of your employees, they can top it up themselves, thus continuing to earn up to 15% cashback at participating retailers.
Also known as Spree, your business can offer prepaid partner cards, boosting the cashback earning potential of your employees’ families. Use it wherever Visa Prepaid is accepted online and in-store, in the UK and beyond. Spree truly is the financial wellbeing benefit that offers continued and meaningful support to your employees.
Did you know businesses can save up to 15.05% in National Insurance Contributions for every employee that takes up a Cycle to Work salary sacrifice scheme? A benefit to the employee and employer!
Better still, you can pump these savings into boosting your employee value proposition with a robust recognition and wellbeing strategy and employee development and training opportunities.
Join Sodexo Engage on our Mission to Boost Employee Wellbeing
Set the scene for 2023 and beyond by supporting your employees’ financial, physical, and mental wellbeing. Whether you already have one or two schemes or are starting from the beginning, our employee engagement and wellbeing experts can find the perfect solution for you.
Get in touch to arrange an initial conversation and we'll get you on the road to boosting employee wellbeing.