Supporting staff through the cost-of-living crisis

Download the guide to supporting your staff through the cost-of-living crisis

 

The cost of everyday essentials such as food, clothing, heating, and electricity are rising rapidly, and wages are not keeping pace. That means that an increasing number of people are finding it difficult, or even impossible, to pay for these essentials without going in to debt. That is what is meant by the current cost-of-living crisis, and it’s a crisis that’s forcing many people to choose between basic necessities such as eating and keeping warm.

 

What’s caused this crisis? There are a number of factors. Russia’s invasion of Ukraine has cut gas supplies, driving up energy costs not only for households but also for manufacturers – who pass on some of these increased costs through higher prices, which fuels inflation.

 

Long-term disruption due to the pandemic has also lead to shortages of computer chips, building materials, and other items leading to supply chain problems, and these problems have also inevitably led to price rises. It’s also likely that disruption caused by Brexit has also led to increased costs and prices rises. Inflation in the UK reached 10.1% in July 2022, and there is no sign yet that it has peaked.

 

The upshot of all this is that life has become very difficult for the staff of many organisations including charities. When people can’t afford to pay for essentials without running up debts then both physical and mental health are likely to suffer.

 

That means staff may find it hard to do their work to the best of their ability. After all, who can work effectively if they are unwell, or if they are exhausted because they have taken on a second job to make ends meet, or if they are too preoccupied with money worries to concentrate or sleep properly?

 

Anything your charity can do to support staff who may be struggling during the cost-of-living crisis is very important – both for compassionate reasons and also to ensure that staff can do their jobs effectively so that your charity’s service users don’t suffer as well.

 

So what can your charity do to help support your staff through the cost-of-living crisis?

 

 

Pay rises

 

The most obvious way your charity can help is by offering staff a rise so that their keeps pace with inflation. By ensuring that their real income – the purchasing power of their income after price rises, in other words – remains unchanged, charities can help shield staff from many of the negative effects of the cost-of-living crisis.

 

If possible, aim to pay at least the real living wage, which is currently estimated to be at least £9.90 per hour for over 18s (£11.05 in London).

 

The problem with this approach is that it is expensive. Many charities are seeing incomes squeezed as donors can afford to give less, and their costs – heating, supplies, and so on – are increasing. So the sad fact is that few charities can afford to offer their staff the sorts of wage rises that are needed without it impacting the services they offer.

 

 

One-off bonuses

 

A lower cost alternative to a pay rise may be to offer your staff a one-off “cost-of-living crisis” bonus payment. Although such a payment may only help staff in the very short run, it may help some staff out of immediate financial difficulties and also improve morale and mental well-being. This is important as it is likely to have knock-on benefits for your charity’s service users as well.

 

 

Help and advice for those who need it most

 

About 25% of employees say that the ability to do their job is being affected by money worries, according to charity CIPD. But clearly those on the lowest wages are affected most, so with limited resources your charity may be able to help most by offering wage increases or one-off bonuses to the least paid staff.

 

Even if your charity can’t pay staff more, you can still help by providing sources of financial guidance and advice, such as the Money Helper (formerly Money Advice Service), and Citizens Advice.

 

 

Salary sacrifice

 

This sounds like staff should accept a lower salary – which is the exact opposite of what has just been discussed. But reducing staff pay may actually help them. That’s because staff pay tax and national insurance contributions on the income they receive, so by swapping pay for some other benefit they end up paying less to the government. An additional advantage is that your charity will also have to pay less in employer National Insurance contributions as well.

 

Salary sacrifice only works if the benefits offered are truly of value to employees. There are a variety of options, and these can include childcare vouchers, additional pension contributions, or even provision of a bicycle through a cycle to work scheme which can help employees reduce their transport costs (and help with health and fitness).

 

 

Income streaming

 

When cash is tight then cash flow – having money when it’s actually needed – can be the difference between staff being able to pay their bills and going into debt. For example, imagine one of your charity staff getting hit with an unexpected vet bill for £50, but not having the means to pay it until the end of the month when they get paid for the work they have done in the preceding four weeks. They may have no alternative to paying on a credit card or taking out a loan, and they will then end up paying much more than £50 because of high interest charges.

 

Your charity can help by offering an income streaming service. This allows staff to get their hands on some of the money that they have already earned before their monthly pay day. This can help them manage their finances better and pay for unexpected events (such as a vet bill or car repair) without using a credit card or payday loan. There are many companies such as fastP.A.Y.E and Wagestream which provide these services for employees to offer. Costs vary, so it is important to ensure that you choose one that matches your charity’s and you staff’s needs.