Research from our 2023 Employee Benefits & Workplace Satisfaction Survey gives useful insights into how employees are being impacted by the cost of living crisis.
In association with YouGov, we polled 1,000 UK employees of small and medium businesses. Unsurprisingly, the increasing price of groceries, utilities and fuel has impacted almost everyone.
Financial strain has a knock-on impact on people’s health and their ability to perform their jobs. In fact, we found that 1 in 5 employees (20.8%) felt the cost of living crisis has impacted their performance at work:
Our research explores how employees are handling the current challenges, and what employers can do to support their staff.
We asked employees how their current financial situation compared to the same period in the previous year:
The material effect of rising costs has left many workers with a real-terms pay cut. We found that most employees’ salaries aren’t going as far as they used to.
While approximately half of people felt financially worse off, almost all respondents were concerned about the crisis:
A whopping 96% said that they were concerned about the cost of living crisis:
This tells us that while there some people who aren’t yet affected, most are still worried about the crisis. Staff may worry about how long costs will stay high, or feel anxious about the situation.
For many people, the struggle to make ends meet often turns into stress. So, we asked employees to agree or disagree with whether they felt stressed:
66% of respondents either agreed or strongly agreed that they were stressed:
CAUSE OF STRESS 🧐
43% of employees agreed that money caused them stress, making this the second highest cause. The only thing people felt more stressed about was work (53%).
To understand more about why employees felt stressed, we asked what makes them unhappy at work. Being underpaid was the biggest reason respondents gave:
Again, the research supports that the current crisis has an extensive impact. Employees report stress and unhappiness as two key consequences of the cost of living crisis. This can cause further issues with employee mental health.
As we’ve seen, 20% of staff felt their performance at work has been affected by the cost of living crisis. When asked about their mental health, nearly half (47%) agreed it had also been impacted:
Our survey results support the idea that the cost of living crisis is leading to a mental health crisis. The Telegraph recently reported on this issue, and how stress is causing symptoms of anxiety and depression.
When people struggle to make ends meet, their mental health can suffer. In turn, this can impact their work performance. If employees are preoccupied with money concerns, they’re likely less focused on the job at hand.
This leaves us wondering how employers can help with the challenges their employees are facing.
Many companies want to be able to afford pay rises and one-off payments to support their staff. But this isn’t always feasible for businesses.
To help identify what employees need right now, we asked them which benefits they wanted to receive:
This data helps us understand what support employees feel they need. But how can these benefits help your team?
Our findings suggest that allowing staff to work flexible hours and/or work from home will have a positive impact. It’s important to be aware that a diverse workforce will have varied priorities:
Giving employees their own choice empowers them to create the work-life balance that works best for them. In turn, this can improve their mental health.
When employees have more control over where and how they work, they can manage their health and wellbeing more effectively.
Wanting higher pension contributions indicates that employees have long-term money worries. With staff struggling to cope financially, they may be less able to save or invest for retirement.
Reviewing your workplace pension scheme can make a big difference.
EXPERT TIP 🤓
You can pass the National Insurance savings from your pension contributions onto your employees’ workplace pensions. This can help them save more towards retirement with no extra cost to you.
Salary sacrifice pension schemes are another great option. They allow employees to make pension contributions from their gross monthly salary. As a result, staff can save for retirement and increase their take-home pay. This is a tax-efficient way to save for retirement.
While it can become costly for employers to implement, Group Health Insurance is a very effective benefit for staff. It enables employees to receive private healthcare quickly, rather than waiting for NHS treatment.
Policies can be tailored to include treatment for musculoskeletal conditions and mental health issues, which are the most common causes of sickness in staff. This can help your employees get back on their feet more quickly after an absence.
Company Health Insurance policies offer access to several other features, such as virtual GPs, counselling services, and Employee Assistance Programmes (EAPs).
These help to address employees’ mental health concerns, which can be caused or worsened by the financial crisis.
Senior Consultant, Employee Benefits
Employers need to be very aware of stress and mental health issues among employees. These can lead to absenteeism, presenteeism and sick leave if ignored.
However, businesses are also feeling the effects of the cost of living crisis. This means employers can’t always afford to increase their support on a tight budget.
There are many other benefits employers can offer without great expense:
Lastly, you need to make sure staff are aware of what benefits they have and how to access them. One way to do this is by providing Total Reward Statements.
Remember that your employees will have differing challenges and priorities at times like these. It’s important to keep the lines of communication open so you know how to provide the best support.
Here at Drewberry, our employee benefits consultants can advise on the best products for your business needs and your budget. Feel free to drop us a line on 02074425880 or by emailing email@example.com.
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