For many of us in the United Kingdom and, indeed, around different parts of the world, we will have felt at least some of the impact of the current cost of living crisis that is so often in news headlines at the moment.
The cost of living crisis in the United Kingdom has been a pressing issue which is affecting individuals, families and the economy in general.
We have all noticed the soaring costs of essential goods and services. The steep rise in our energy bills, in fuel prices and the food shopping bills. And all of this has placed a significant burden on UK households.
Obviously, some people and families have been affected more starkly than others with some families having to resort to using foodbanks to feed themselves. Many people who are working in full time positions are still struggling to cover even their basic living costs.
It shouldn’t come as a surprise then that the impact of the cost of living crisis is also being felt in the workplace. The workplace is not simply a place where people leave all their financial issues and stresses at the door before happily continuing with their job.
In this article, we will delve into the effects of this crisis on the UK workplace, exploring its impact on employees, employers, and overall work dynamics.
The impact of financial stress on employee productivity
One of the primary impacts of the cost of living crisis on the UK workplace is the increased financial stress experienced by employees.
As the cost of living rises, employees often find it challenging to make ends meet and this clearly leads to heightened stress and anxiety that is then brought into the workplace.
Stress and financial stress can adversely affect an employee’s productivity, focus on tasks and overall well being. This then impacts the company as there is decreased efficiency and motivation in the workplace.
During these difficult times, it is important for employers to be aware of the struggles that many of their employees might be going through and make them aware that you are not blind to it. Have an open door policy where employees can speak to you about problems they might be facing.
The constant worry about meeting basic needs and managing expenses can create a significant distraction and hinder their ability to perform optimally at work.
We have written in the past about the benefits of mindfulness in the workplace and creating a culture where employees can feel that their well being is taken seriously. This can have a more positşive impact on the workplace during periods like this cost of living crisis.
Cost of Living Crisis impact on salary stagnation & inflation
It is said that the cost of living crisis has contributed to salary stagnation and even where salary increases have occurred, employees in some sectors are finding that these increases are not enough to fill the gap to meet their daily living costs.
Inflation can erode the purchasing power of your employees, making it harder for them to maintain their standard of living without a corresponding increase in wages.
For some, this can mean sacrificing an annual holiday or making some changes to the monthly food shopping list. But for others, it can lead to them having to make choices about which bills to pay and not being able to afford any extras for leisure activities.
Employers may face challenges in balancing the rising cost of living with competitive salaries for their employees.
However, failure to address this issue can lead to dissatisfaction amongst your team of staff and this can affect your staff retention and future recruitment efforts.
We have written in the past about the issue of whether or not employers are paying their staff enough. A living wage is essential for staff to cover their basic needs.
If, as an employer, you are doing your absolute best to pay your team the most competitive salary you can, having that culture and open door policy where staff feel they can come and talk to you about any financial needs they are facing will make them feel listened to and understood.
Shifts in employment preferences
The impact of the pandemic and the cost of living crisis together have served to influence the preferences and priorities of job seekers.
Young people are now placing more emphasis on compensation packages, benefits, and work-life balance when evaluating job opportunities. In a high-cost environment, potential employees are likely to prioritise positions that offer better financial stability and support to mitigate the effects of the cost of living.
Employers need to adapt to these changing preferences to attract and retain talent.
Where possible, try to offer flexible work arrangements such as the opportunity to work remotely on occasion, if not all of the time. Depending on the type of role and the financial position of your employees, creating the opportunity for them to work from home will mean they have fewer or no commuter fees. A welcome bonus during a cost of living crisis.
Additional benefits, competitive salaries can be essential strategies to remain attractive to prospective employees. Any strategies you have embraced to help your team with the cost of living crisis can be displayed in your job ads when recruiting young people.
Impact of the Cost of Living Crisis on mental health
The financial strain caused by the cost of living crisis can have a significant impact on the mental health of employees.
Financial worries, including concerns about paying bills, affording housing, or providing for their families can lead to increased stress, anxiety, and depression.
Employers must recognise the mental health implications of the cost of living crisis and take proactive measures to support their employees. There are lots of strategies that can be employed for this such as mental health and wellness programmes, counselling services and stress management workshops.
Encouraging open chat between employees and also between employees and team leaders can also help employees know they are not alone in this.
These strategies can help to alleviate the mental health burden on your workforce.
Cost of Living Crisis & implications for Work-Life Balance
Depending on the nature of your company, as an employer, you might be in a position to offer some of your staff some extra hours so that they can boost their income to make ends meet.
However, this can be both a good thing and a bad thing. The cost of living crisis often forces individuals to work longer hours or take on additional jobs to make ends meet.
Extra hours or another job can have a serious effect on the work-life balance of employees. This can lead to fatigue and, ultimately, burnout.
We have written in the past about the prevalence of burnout among employees. If you are recruiting young people, it is important to ensure that they don’t suffer from burnout at a young age.
Whilst it is more difficult during this cost of living crisis, creating the opportunity for staff to be able to balance work and personal life is crucial for employee satisfaction and sustained productivity. It’s a win for both employer and employee.
Cost of Living impact on small businesses
Whilst larger businesses and corporations are often in a position to absorb higher costs at themes like a cost of living crisis, small and medium-sized businesses, in particular, face significant challenges due to the cost of living crisis.
Higher operational costs, increased prices of raw materials and rising wages can strain small business owners, affecting their ability to sustain and grow their enterprises – and to retain their top talent.
To address these challenges, small businesses may need to reassess their business models, optimise operations and explore innovative ways to manage costs while ensuring fair compensation for their employees.
Government support and policies that aid small businesses during these difficult times are crucial and as an employer at a small business, you no doubt keep a close eye on government Budget Announcements to see where help is going to be available.
The Cost of Living Crisis in the UK
The cost of living crisis in the United Kingdom has far-reaching effects on the workplace, impacting employees, employers, and the overall dynamics of work.
From financial stress and reduced productivity to shifts in employment preferences and mental health implications, it is imperative for employers and the government to address these challenges.
Finding sustainable solutions that promote employee well-being, financial stability, and a healthy work-life balance is essential to navigate the cost of living crisis and ensure a thriving and productive workforce. A win-win strategy where both the employee and the employer benefit needs to be sought and implemented.