From war in the Ukraine to domestic policy responses, a range of economic drivers have led the UK into the worst cost of living crisis in living memory. ONS data released this week shows that a quarter (24%) of adults are hardly ever able to keep warm and one in seven adults are worried that food would run out before they had money to buy more.

With cost of living pressures continuing to bite, organisations will be reviewing the support they provide to their employee’s financial wellbeing. While a lot has been written on the ways the cost of living crisis is impacting our lives, less is known about how employers are responding to the changing needs of their employees.

Alongside inflationary pressures, employers are also facing skills shortages and mismatches with approximately 450,000 fewer workers in the labour market now than there were before the pandemic. Supporting workers as living costs rise is not just an altruistic measure, in many cases it makes business sense.

Some employers have been able to increase wages in line with the inflation. Some, such as Lloyds Bank and Rolls-Royce and Virgin Media have provided their staff with a one off cost of living bonus payment.

Of course, with real question marks around potential shifts in the economy to come over the months ahead, not all employers are equally able to step in. SMEs in particular will be operating with such tight margins or facing such a high degree of uncertainty that they may feel unable to offer a sustained wage rise at this point. But even under those circumstances, employers can consider other forms of support, such as increased flexibility or signposting to support services.

The squeeze on living costs initially appeared to be a short sharp shock, which means most support with financial wellbeing so far has been ad hoc and reactive in nature. As it becomes clear we are facing a protracted crisis, this is a point to take stock of what is working, to consider which forms of support are most effective, and engage with staff to shape a long term approach that is valuable to them.

There is no one-size-fits-all approach to employee support

The impact of the cost of living crisis has not been felt equally and there won’t be a one-size-fits-all solution to help workers make ends meet. The lowest earners are spending more of their weekly budget on food and energy, and are facing greater costs. The ONS have reported that inflation rates are three percentage points higher for lower earners than those on the highest incomes.

It is vital to understand the needs of different groups as well as the differing capacity among employers in meeting them. The workers most affected by rising living costs are more likely to experience severely insecure work and be employed within the sectors most affected by inflation, such as hospitality and retail.

Supporting employees’ financial wellbeing raises an important question about responsibility – is an employer’s remit confined to issues affecting worker wellbeing at the places and times they work, or does it extend to broader wellbeing issues that people encounter in their day to day lives?

This is the underlying question that we are probing as part of a project that we are now underway with here at the Work Foundation. Through quantitative and qualitative research, we are gaining insight into the types of trade-offs and considerations that employers are grappling with as they develop financial wellbeing support for their staff.

This will be the first project of our new strand ‘Working Lives’ which aims to tackle structural inequalities in the labour market by understanding the shifts in our nature of work such as the pandemic, technology or climate change by providing insights into how these shifts in our ways of working impact our lives.

We will aim to find evidence-based solutions to achieve progressive, fair and inclusive organisations where both employers and employees thrive at what they do. If you are interested in these research questions and would like to follow this programme as it develops, please sign up to our newsletter.

If you are an employer who would like to share some of the work you’ve been doing on financial wellbeing, then we are looking for examples and case studies. Please complete this form or get in touch with Trinley Walker, Policy Advisors, t.walker9@lancaster.ac.uk

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