We asked Jonathan Watts-Lay, Director, WEALTH at work: Do you think the changes that employers are making to their pay strategies, such as pay rises, one-off payments, early access pay, are sustainable in the long term? What else can help employees in the current environment?
He comments; “There are a range of strategies which will have varying impacts and I will concentrate on two of these.
Firstly, whilst pay rises are likely to lag behind inflation in the near term, it is important that employers ensure they are supporting staff with the cost of living crisis. There are many ways this can be achieved and it is a crucial part of any financial wellbeing strategy.
This may include providing help in areas such as the benefits offered by the employer including; discount schemes (e.g. money off grocery shopping), help with financial planning including debt support, and salary sacrifice schemes to help reduce costs for travel, mobile phones, gym passes and health and dental care.
There are also practical steps that employees can take to save money that they may not yet have considered. Whilst some of them seem small, they all add up. This includes checking all outgoings to find other ways to save money such as cancelling any unused subscriptions or memberships, shopping around for better deals on insurances at renewal, such as car and household insurance, as well as broadband and mobile suppliers, and switching brands on the regular shop. Rising energy costs are a big concern so things like avoiding tumble dryers, utilising smart heating, using more efficient light bulbs, and finding cheaper ways of cooking such as using a slow cooker can all help.
Secondly, regarding early access pay, it is important this is explained properly to staff so they understand the true cost of any scheme they may have access to. These types of schemes normally come with a charge, so whilst they can be helpful as a ‘one off’ (e.g. the car needs fixing and without the car you can’t get to work and earn!), they are not such a good idea if they become the norm to pay for usual weekly/monthly expenditure.
Financial education and guidance delivered in the workplace can really help members understand these issues and should cover topics such as how to budget, tips for saving money, and debt management, as well as how the workplace benefits available can help.
With the cost of living crisis hitting many hard, supporting employees to build their financial resilience and improve their financial wellbeing is of utmost importance right now.”
