A cost of living crisis affects workers’ well-being and mental health. 52% of therapists report clients experiencing insomnia or trouble sleeping due to money worries. Plus, when workers are distracted, they’re not focused on their work.
Productivity drops; the knock-on effect is less output, sales, and profit. You can make inflationary times more bearable for your staff as an employer. By genuinely caring about their well-being, you’re also helping yourself, your business, and its bottom line. If they’re your employees are well paid, they will be distracted by rising costs.
Hyperinflation is not good for businesses, and inflated prices impact everyone, particularly fixed-income employees.
Getting Through The Cost of Living Crisis
Let’s look at how your business can help your staff get through the cost of living crisis, including:
- Employee financial well-being strategy
- Understanding the cost of living is happening
- Planning and Preparation
The cost of living crisis has been going on for years, and it’s getting worse. It affects everyone in different ways, but there are things that you can do to help yourself and your employees cope with this issue.
What we do now is when disposable income is stretched, it’s the activities that help to reduce stress and improve mental and physical fitness that are reduced or foregone completely. A lack of funds forces people to cut discretionary spending like a gym membership. Engaging in physical activities improves the quality of sleep and reduces mental stress. Chemicals like endorphins and serotonin are renowned for improving mental fitness and well-being.
When workers are stressed, their financial worries can be brought into the workplace. Businesses suffer when workers are hindered by the following:
- High levels of distraction
- Lower productivity and work ethic
- Poor and inconsistent task performance
Therefore no business can afford to ignore their workers’ mental health or well-being. As a business owner or people manager, your employees’ mental fitness should be top-of-mind for brand reputation, customer acquisition and continuity, as well as employee retention and attrition. Therefore, you must implement a financial well-being strategy that can help protect your employees during this difficult time.
Employee financial well-being strategy
How do you protect your employees during the cost of living crisis? There are a few steps your business can take including:
- Income protection and health insurance
- Pension contributions
- Employee employment incentives
- Financial advisor and investment education
Group income protection is one way to protect your employees financially if they find themselves off work due to illness or injury. These policies can help you pay a replacement salary for the employee until they can get back on their feet and go back to work.
With the economic turmoil, young workers have turned to opting out of workplace pensions to save more money. In fact, around 34% of workers have either opted out or are considering opting out. However, this harms your employees in the long run, so you may consider adding more value to workplace pensions by increasing employer contributions.
It may be worthwhile to re-evaluate your business’ benefits package, from loyalty reward schemes to access to gym facilities or discount schemes. Improving the benefits package can help protect your employees in times of economic turbulence, especially in terms of cost reductions on things like groceries from Costco, for example.
Access to financial support and advice
The current crisis can be challenging and confusing for some, so it would be a good idea for your employees to have expert advice on what to do in these situations. This can be beneficial for employees struggling with managing their finances, and so having a professional with whom they can ask questions and for advice can make their lives easier.
Advise on assessing expenditure and how much money is spent each month on rent or repayments on a home loan, utilities, food, transportation, insurance, taxes, and other expenses. Then how to create a budget to live within the constraints of their wage.
Encourage open communication about money
Stigma surrounds debt or other financial woes, so people are often embarrassed or ashamed to ask for help from others. Enabling a safe and comfortable environment for your employees to have open and honest conversations about money can be a step in the right direction in protecting them by encouraging them to seek the financial services and support they need.
Understanding Why The Cost of Living Crisis is Happening
There are several reasons why the cost of living crisis is occurring. We live in an economy where businesses struggle to survive due to the pandemic and supply chain woes. Plus, technology has made our lives easier by allowing us to work remotely. Think of the businesses that survived on workers needing transport, food, business attire, etc. People spend less when they’re at home.
Arguably the government is not doing enough to help small business owners. For the businesses that provide products or services that need workers’ discretionary income, their decline can be swift and severe when people have less disposable income.
Build an emergency fund
Focus on creating a more bottomless emergency fund to survive the tough trading times. Use it to also support your staff struggling with transport costs.
Maybe also consider relocating your workplace to a cheaper location or providing workers with a city loading or a cost of living monthly fee.
The cost of living crisis is not new, but hyperinflation is a new experience for younger workers. Knowing the impact of the cost of the living crisis on your staff and how your business can lessen its impact will improve employee well-being and mindset. As the saying goes: tough times don’t last, but tough people do.