Strategies to help employers step up in the cost-of-living crisis
Costs are rising at an unprecedented speed. Inflation rates in the UK hit 9.1% in May and continue to increase at a pace that hasn’t been seen in the past 40 years. It’s crippling families that are struggling to make ends meet. The responsibility falls to the Government and employers to protect staff, the latter being in a unique position to offer real support thanks to the salary link.
And by real support I’m not talking about courses and webinars discussing financial best practice. These methods of ‘support’ don’t really seem to get to grips with the issues people are experiencing in these times of economic hardship. The solution has to be a tangible, measurable strategy that delivers real outcomes, which is the same approach businesses would adopt to solve any other business challenge.
The crux of the problem is a lack of savings. But there are really simple strategies organisations can implement to alleviate pressures and improve the financial resilience of their staff.
Not just how, but when
Many employers overlook the fact that they’re in control of not just how employees are paid but when they get paid, too. By using tools such as on-demand pay, employers are able to provide access to pay early if necessary, smoothing income to support unforeseen expenditure, such as vet bills or child care. This ensures staff are covered without having to get into debt.
This will help employees to solve immediate cash flow problems but, of course, a long-term solution is also necessary.
Building savings habits
In order to protect oneself when unexpected expenses arise, it’s necessary to have a savings buffer. In times of economic hardship, this is very difficult to build. However, the employer is, again, uniquely positioned to provide a solution.
A lot of the issues around a lack of savings are not necessarily about the monetary amount itself. It’s about building savings habits. Small behavioural changes have monumental effects on this.
Organisations that offer salary-linked savings schemes are ahead of the curve, taking money straight out of an employee’s paycheck and adding it to an account that has access to some of the highest savings rates on the market. Even if this is just £50 a month, over the course of the year it provides employees with a £600 savings buffer.
It also creates a life-changing savings habit by taking away all the barriers to putting money aside for a rainy day.
The most crucial part about this solution is that it is measurable. Employers can immediately see the effect their strategy is having on their employees’ savings, rather than just parting with advice and hoping it sticks.
During challenging times a business-minded approach is necessary across an organisation, including HR, and this strategy provides both a long-term solution to saving problems and immediate relief from cash flow problems.
This is real support and it has never been more necessary.
Stephen Holliday, pictured below, is CEO and founder of financial wellness platform Level