It is no secret that the UK is currently in the midst of a cost of living crisis, and, as a result, the financial wellbeing of many individuals is suffering. With inflated fuel costs and extortionate utility bills, monthly incomes are not accounting for nearly as much as they used to. So much so that those who have never had money concerns previously are now finding it hard to stretch their pay cheque to last them until the end of the month.
The financial circumstances in the UK have never been so unpredictable, meaning that more people are experiencing monetary strain than not. In order to combat this ever-growing issue, it is down to employers and the government to make a change.
The cost of living and employment situation
Although it feels like the cost of living crisis has suddenly hit us, it is a problem that has been spiralling since the 2008 financial crisis. Quite simply, the median earnings of British citizens have not grown as fast as prices, even with the statutory National Living Wage being introduced. Since 2008, the salary of the average worker has barely shifted, while the cost of living has skyrocketed. As a result, any compulsory pay rises become seemingly insignificant to the average employee.
Regarding the consistent rise in the cost of living, financial wellbeing is just one aspect that employees, employers, and the government need to concern themselves with. Financial wellbeing, emotional wellbeing, mental wellbeing, and even physical wellbeing are all heavily interlinked. This is because feeling financially insecure can lead to mental illnesses, such as depression and anxiety, which can make one more susceptible to physical illnesses. Consequently, if employers and the government do not facilitate real term pay rises across the board, they could see an employee’s ability to do their job being negatively impacted.
Tips for employers
When it comes to improving the financial wellbeing of your employees, there are short-term and long-term measures you can implement. Short-term measures include:
- Guiding workers towards helpful information sources regarding finances
- Paying employees as much as you can afford to
- Ensuring all payment processes and outcomes are fair (e.g., paying close attention to gender/ethnicity pay gaps)
Longer-term measures include:
- Investing in your management capabilities to bolster productivity and make pay rises more affordable
- Establishing support mechanisms for employees who find themselves in financial hardship (e.g. access to early pay, debt counselling access, hardship loans, etc.)
- Providing employee benefits that help stretch the earnings of your staff
- Offering learning and development opportunities so low-paid workers can progress in their careers
- Creating a financial wellbeing strategy (e.g. financial education programmes)
- Becoming an accredited Living Wage employer
How reward schemes for employees and management can help
As previously mentioned, providing employee benefits that help stretch the earnings of your staff can be beneficial to the financial wellbeing of your workers. These benefits for part of a reward and recognition scheme for employees. When it comes to improving the financial wellbeing of your staff, it is not solely about giving them more money. Money will eventually run out, but the benefits of a total rewards strategy will assist the financial wellbeing of your workers throughout the course of their employment.
Businesses looking at implementing total rewards strategies need to provide motivating benefits and bonuses that make their employees feel secure in their position. From this security, the financial wellbeing of workers improves, enabling them to deliver better results for the company.
Actions for the Government
Although employers can do their bit to aid the financial wellbeing of their employees, the government must also be on board with initiatives to really make a difference. They could offer short-term support in the form of:
- Improved financial support during illness and other unavoidable absences
- Protected wages and jobs by providing financial support to employers
Longer-term support may come in the form of:
- Assistance in raising a company’s productivity. A stronger focus needs to be placed on increasing the demand for skills, leading to greater investment in learning strategies.
- Teaching financial literacy in schools, further education, higher education, and apprenticeships so that future workers are equipped with a strong sense of financial awareness.
The Paydata viewpoint
Employers have a responsibility to support the financial wellbeing of their workers, as they are the providers of their staff’s main source of income. As a result, employers need to pay a liveable wage and support career progression.
As a leading reward management consultancy, we can guide employers in the right direction when it comes to assuring the financial wellbeing of their employees. Contact Paydata to learn more about the measures you can implement to keep your staff feeling financially secure. We are all in this together.