The cost of living crisis and the role of employers

The cost of living crisis refers to the fall in ‘real’ disposable incomes that the UK has experienced since late 2021. People over 45 are being squeezed most with 8 out 10 reporting an increase in cost of living.

Financial wellbeing is often one of the most overlooked aspects of employee support, despite the close relationship between financial security and well-being. We often hear sayings such as ‘money doesn’t buy happiness’ however, of course it does to an extent.  It provides you with a means to meet your basic needs and to do the things you value in life, such as enjoy free time. In fact research suggests that up to a certain point, wealth is associated with happiness (Jebb et al, 2018).

Employers can offer greater financial wellbeing support and this can make a difference. This might include:

Offering a fair and livable wage: wages are of course the most direct way a company can support the financial position of their employees.

Normalising conversations about money: we often avoid conversations about someone financial position as it is traditionally seen as something that is very personal. However, I would argue that employers have a responsibility to ask about their employees current financial position, particularly if you are aware of any hardships. This should of course be an invitation to discuss.

Offering targeted benefits and opportunities for progression: Employers may not be able to increase wages however they might be able to offer other benefits e.g. gym membership. Opportunities for progression are also an important part of not only increasing wages but also supporting an individual’s development.

Interestingly, employees of companies who do have a financial wellbeing policy are more likely to be able to pay their credit card payments amongst many other positives.

Jebb, A. T., Tay, L., Diener, E., & Oishi, S. (2018). Happiness, income satiation and turning points around the world. Nature Human Behaviour, 2(1), 33-38.