Cost of living: how employers can target support for better results

Pretty much all of us in the UK are currently worried about money. Inflation has raised the prices of almost all essential goods, whilst at the same time triggering a fall in real wages that has drastically weakened spending power.

But, according to a new survey by money.co.uk, the fallout is hitting certain age groups harder than others – alerting small business owners of the need to tailor aid to staff members depending on their specific life stages.

The financial advice website polled 2,061 workers to examine the generational impact of the cost of living crisis. Based on the results, the downturn has wreaked the most havoc on young peoples’ mental health, while older team members have faced greater financial hardship.

Below, we’ll dive into the data in more detail to determine which support measures will bring the greatest results, based on employee demographics.

Young people face biggest hit to mental health and wellbeing

Generation Z staff members – those aged between 16-24 – have borne the brunt of the financial stress caused by today’s poor economy. money.co.uk’s research shows that 56.29% of this group have seen a negative impact on their mental health and wellbeing.

One in eight reported they were ‘severely suffering’ over money concerns as wages nosedive, the most of all groups analysed.

The money.co.uk findings come after research by London Heritage Quarter found that 54% of Gen Z workers feel lonely when working from home.

To combat feelings of isolation, many are choosing to return to the office as a way to socialise without spending money on going out.

money.co.uk also asked respondents what measures they had taken to combat the financial pressures.

43.58% cut down on their food shop and other essentials, while 38.55% were using less energy in their homes. 26.12% said they have borrowed money from family or friends to cover debts, the most of any age group.

How should employers support Gen Z?

Hosting work parties and social gatherings is a good way to encourage team members to develop interpersonal relationships, reducing the risk of loneliness amongst younger colleagues.

This will help to build a positive organisational culture and improve staff morale. In turn, managers will have an easier job of attracting and retaining young talent for lower staff turnover.

Employers might also consider investing in office perks like free meals or subsidised travel, to show awareness of how rising inflation has limited employee spending.

To prevent and address poor mental health in the workplace for every age group, line managers should be trained on the support processes such as managing absences and performing consistent check-ins.

Access to occupational health services such as counselling should also be given, when necessary.

Millennials experience most money trouble

While younger people have seen the most negative impact on their mental health, millennials (those aged 25-34) report the biggest hit to personal bank accounts.

In last month’s Spring Budget, the government announced an extension to free childcare for those with children aged between one and two.

This is intended to offer more financial breathing room for working mothers and fathers.  Nursery and childcare costs have become unaffordable for many.

A recent survey by Indeed shows that the policy has encouraged parents to up their average working hours. However, the problem is not fixed. The same report found that, of those parents  planning to return to work, 44% said they would look for a part-time role compared to 22% who will look for a full-time job.

money.co.uk found that one in five parents aged 25-34 reported an increase of £50 to £100 in their monthly childcare costs.

Monthly dependent care expenses amongst millennials were £157.27, on average. That’s 48.58% more than over 55s and the most of all age groups.

This group also reported the highest increase in their monthly bills on average, and were 13.90% more worried about mortgage repayments than any other group. One in five had used their overdraft to pay for bills, the highest analysed.

How should employers support millennials?

We spoke to Brett Wigdortz, CEO of childminder startup tiney.co, about how employers can show their appreciation for working parents.

Wigdortz advised introducing flexible hours, by first cementing a hybrid working policy. Doing so ensures team members can change their working style day-to-day depending on care commitments.

More employers have also began exploring the potential of a four day work week, a reduced-hours policy that gives workers the option to complete their job role in four days, rather than five.

Flexi-hours is another option that allows the staff member to bank any extra hours worked to take from a future working day.

Similar to their Gen Z coworkers, any allowances that can offset extra spending on bills, such as subsidised lunch and travel, will also be welcomed by millennial workers.

Older workers least likely to struggle in the cost of living crisis

Those 55 or older have struggled least with the cost of living crisis. In fact, only one in four were affected at all: less than half the amount of 25-34 year olds (60.89%).

Typically without the burdens of young children or mortgage payments, this group appears to have seen the least change to their lifestyle. 73.41% report the cost of living having had no impact on mental health.

People older than 55 are least reliant on benefits, with one in five requiring government assistance.

How should employers support older workers?

It’s easy to view money.co.uk’s research as a signal that the over 50s are a ‘safe bet’, as a group that will be unbothered by the cost of living crisis.

That said, over 55s have experienced the smallest pay rises in the last year of 3.03%. That’s a noticeably smaller increase than 16-24 year olds (8.46%).

This group is actually at high risk for leaving the workforce. Parliamentary research indicates that more people are choosing to take an early or phased retirement.

Our own guide to hiring over 50s workers highlights the many strengths that older colleagues can bring to the workplace. These include new perspectives, broader experience, and also mentoring opportunities.

If you are using the cost of living crisis to re-think or design your benefits offering, don’t overlook the bonuses that can motivate older colleagues. For example, a more generous retirement package.

What can SMEs learn from the money.co.uk research?

Diversity is one of the most powerful tools to make your workforce stand out from competitors.

Small businesses tend to have smaller teams and less emphasis on hierarchy. Considering this, bespoke benefits – strategically crafted based on the workforce’s unique needs – will provide more value than blanket policies.

SMEs are themselves struggling to survive in the face of an impending recession. In this depressed business climate, knowing where to target any additional compensation is the most effective and efficient route to supporting employees in the difficult months ahead.

The money.co.uk research gives a broad overview of the challenges currently faced by specific age groups. Still, conducting an employee survey is the best method to gauge staff opinions on what is or should be included in your perks and benefits policy.

Staff members will be given allowances that are directly answering their biggest concerns, while employers can feel confident that the budget has been well-spent.

Admin will understandably be the biggest barrier to this approach. Amongst the tools to help is employee management software. This works to assist human resource teams with things like salary details, bonuses, and medical information.

Nebel Crowhurst is CPO at Reward Gateway, an employee engagement platform. Crowhurst says: “Now more than ever, employers need to implement initiatives that help employees’ paychecks go further.

“Using a digital employee engagement platform is a cost-effective, sustainable way for employers looking to support staff during trying times to show you care and boost their financial welfare.”

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