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The recent hike in the cost of living has raised the essential question: how to help employees with the cost of living? Moreover, the recent surge in inflation and the energy deficit worldwide has pushed many families and people into poverty and homelessness worldwide. It has become imperative for employers to support employees and their families to help sustain and overcome this global challenge.
Employers and employees need to work together by utilizing an effective communication channel and helping the management develop the most appropriate solutions to address these issues.
Only by helping employees with the cost of living crisis can a business or company be able to retain human resources and cut down on unnecessary recruitment, onboarding and training expenses in an expensive economy.
Understanding the cost of living crisis
Overall poverty and the lack of energy, which has given rise to the global energy crisis, are the top two reasons for the surge in the cost of living globally, according to the UNDP. Around 71 million people are expected to be pushed into poverty because of this crisis.
Another important reason for the rise in the cost of living is the Russian invasion of Ukraine, which increased wheat, corn and sunflower oil prices by 40, 60 and 75 percent, respectively. These reasons combined have had a severe impact on global spending.
As employers, it becomes a moral responsibility for companies to protect and promote well being amongst employees so that employee morale can be maintained.
Companies that take an active part in promoting employee well-being by taking measures to protect them against cost of living adversaries:
- Have a more motivated, happy and loyal employee workforce.
- Better revenue generation for the company.
- Retention of trained employees.
Moreover, this mutual well being protects both employees and employers.
Cost of living: the employer's responsibility
A study has revealed that although many companies know that they need to help employees through the rising cost of living, only 38 percent of companies have actually taken any measures to curb this inflation.
Studies in the UK established that only a small portion of companies were paying a short-term solution, such as a hike in wages or salaries or a one-time bonus that helps employees battle inflation in the economy.
Only by adopting new and innovative ways to help employees can a company help protect their employees from falling into shortage, poverty and even homelessness in certain dire situations.
By supporting employees with cost of living in these hard times, employers can motivate employees to stay productive and focused in a difficult economy with a system that protects them against rising prices. It promotes a positive employee spirit and helps retain employees in a competitive world.
As per legal obligations and labor laws, it was noted that household incomes fell by 14 percent whereas the cost of living in the UK rose by 18 percent. This means that people were finding it hard to meet ends in the UK. The labor law mandates that minimum wages must be met at all costs. Unfair payment of lower wages to cut company costs is against the legal obligations in the UK. Employment tribunals are set up to help protect employee payment issues against employers in the UK.
How to help employees with cost of living: 7 strategies for employers
Here are the 7 effective strategies for employers to support employees with cost of living crisis.
1. Salary adjustments and cost-of-living increases
One of the most effective solutions to help with cost of living expenses is to increase the salary, provide rewards, perks or benefits etc so that employees can pay bills easily and procure essential supplies for the family. In the UK, many companies have provided a 5 to 10 percent hike based on the management hierarchy.
2. Employee financial wellness programs
Employee financial wellness programs are an excellent way to help employees with cost of living and promote learning resources that help in aiding the wellness of employees. This can include learning and development programs, training, budgeting and cost cutting measures for personal life and many other resources that are available at the employees’ disposal.
3. Flexible work arrangements
Flexible work with flexible working hours, hybrid work environments, option to support parental leave, day care and other support for women can all be very helpful in battling rising expenses. With options to cover shifts and report to work with flexible programs, employee morale and productivity is boosted proportionally.
Dell took this step after recognizing the high value its employees placed on flexibility. Although an informal policy existed before, it wasn't well-defined. Recognizing that many staff members often have preferences or necessities to work beyond typical hours, Dell aimed to empower them to work based on their distinct preferences and rhythms
4. Affordable healthcare options
Health and safety is an important cost of living support for employees and needs to be addressed for employees as per the labor laws. It is important that employers provide a comprehensive healthcare scheme and offer a safe workplace for employees.
Training for work, protection gear and a safe workplace are top priorities to prevent injuries and accidents in an expensive economy today.
Notably, Campbell goes the extra mile by contributing 4 percent as an employer match to these retirement savings, illustrating their commitment to the long-term well-being of their staff. In addition to these retirement perks, employees also receive a substantial $1,000 in health savings account funding. This provision ensures that they have a cushion to cover medical expenses, underlining Campbell's dedication to the health and financial security of its workforce.
5. Housing assistance programs
Many companies are also offering housing assistance due to the high rents which is pushing employees into forgoing home rents and home loan payments because of cost of living expenses. Housing loan allowances and other such schemes to protect employees from rising rent prices can be provided by companies.
6. Education and upskilling opportunities
Training and learning opportunities are one of the best ways to promote employee skills and utilize them to better serve the company. Not only does this improve the employees’ productivity and gives them a scope to earn better, it also allows employees to make use of these skills to improve company revenue.
The company intends to augment its current training initiatives and launch new ones. For instance, the Amazon Technical Academy is designed to equip non-technical staff with the expertise required for software engineering professions.
Associate2Tech is aimed at training front-line workers, responsible for order fulfillment, to transition into tech positions, even if they lack prior IT background. Additional schemes will be geared towards grooming employees for various positions within Amazon and roles in diverse sectors. Participation in all these training sessions is optional.
7. Remote work and telecommuting options
Remote work such as work from home, hybrid work schedules can help in cutting down on fuel and commute expenses. This is one of the best ways to support employees with cost of living and promote physical and mental well being in workplaces as many employees prefer to work from home whenever possible.
With this flexible approach, employees can save substantially on commuting expenses and other associated costs of working from a central office. In addition to the tangible savings, the hybrid model also addresses other concerns, such as the emotional and mental strain of being away from family and pets for extended periods.
Adobe believes that by offering a balanced work environment, it can play a role in mitigating the effects of the rising cost of living while simultaneously fostering increased work productivity.
Employee feedback and involvement
By providing cost of living help for employees, companies are ensuring that their employees feel protected and cared for. Companies must set up employee feedback program to involve employees in the measures that management can take to protect employees in such situations. When employees are involved, they feel heard and respected.
- Employers can create a feedback system using surveys, forms, apps or any other way to include employees.
- Employee suggestions can help management make more informed decisions and come up with schemes that are most effective for the particular employees of the company and their specific requirements.
- Using this method, they can hope to create a culture of financial support and well being within the company where the employees feel heard and seen in a financially challenging economy.
Dealing with cost of living crisis: challenges and potential barriers
Not all companies and businesses can afford to do the things we have listed above as a measure to curb inflation and cost of living crisis in the economy.
Here are some insights how businesses can step up and help:
- Budget constraints and limited resources can be a major drawback and prevent companies from actively helping employees in their cost of living crisis.
- Such companies can take assistance from other government funded schemes to come up with new ways to support their employees.
- It is important that the management and stakeholders of the company be onboard of any wellness measures that are devices by the company.
- These measures also need to be fair and inclusive so that all employees no matter their color, caste, creed, race or background be able to access them in the company.
- HR managers must ensure employee protection and fairness for all measures and programs developed in the company be accessible to all employees.
Many companies have evolved to become cost of living crisis employer superheroes by protecting their employees in such dire situations and a hard economy. With a soaring economy that has engulfed 51.6 million people into poverty and homelessness globally and is set to touch a record high of 72 million people by the year's end, it is important that companies and businesses take up the task of protecting employees and helping them out financially.
Companies can adopt many innovative ideas as we have discussed to help employees in both financial aspects and in non-financial aspects by lowering the costs and providing flexible options that help in curbing inflation. Simple things such as healthcare, reward systems, pay hikes, bonuses, learning centers etc can be of great help to employees in these situations.