High inflation has led to a cost-of-living crisis and strike action by groups of employees demanding pay rises in line with inflation. Strikes are less common in smaller businesses, but their employees will also be feeling the pinch, and the temptation of higher wages elsewhere. What can you do to help?.
Financial stress often leads to lower job satisfaction, but increasing employee pay in line with inflation may be unaffordable for many businesses. There are, however, steps employers can take to help bridge the gap between an affordable pay rise and inflation pressures.
- Inflation is predicted to fall. A one-off payment could help staff cope with immediate financial pressures without committing a business to higher salary bills in the longer term.
- Linking pay more closely to performance means that a salary rise at least partly pays for itself by increasing business income.
- Education about budgeting and financial decision making helps employees make their money go further and understand the longer-term consequences of potential money-saving moves such as cancelling pension contributions.
- Employers could even provide additional benefits in kind that they can access more cheaply than individual employees, for example gym membership or discounted goods and services.
- Likewise a business may be able to provide medical insurance for employees at a lower cost than employees taking out their own policies.
- Setting up a cycle-to-work scheme gives employees the chance to save public transport costs and may provide a tax advantage depending on how it is set up. It also gives rise to potential health benefits for employees.
- Meals in a staff canteen, a mobile phone and some forms of childcare support are valuable tax-free benefits for employees where it is feasible for these to be provided.
Many employee benefits are taxable, but there are some non-financial benefits that can promote employee wellbeing and retention. Flexible working and home working have grown in popularity especially since the Covid-19 lockdowns. Such practices make it easier for employees to manage childcare and other responsibilities and improve work–life balance. Working at home also reduces commuting costs.
