The Cost-of-Living Crisis: How organizations committed to EDI can support the financial wellbeing of their employees
In this blog, Teresa Norman, EW Group & Challenge DE&I Specialist, shares her advice on what organizations can do to support the financial wellbeing of employees during the cost-of-living crisis.
It’s scary, isn’t it? Inflation is at 9% and the Bank of England has warned it will reach 11% this year. I am old enough to remember the 1970s and the impact of inflation. I recall asking an adult then what inflation was. His response: “Wages chasing prices and prices chasing wages”. I still think for those of us who are not economists, that that is a pretty good explanation. It’s a spiral that is going to have huge consequences for all of us.
The 2020s are very different to the 1970s, though. In some ways we are a much better society — we have the Equality Act, our thinking on diversity and inclusion has developed immensely but in some ways, as a society, we are more fragile.
- We have a much bigger population — the UK population stood at 55 million people 20 years ago compared to today at over 68 million.
- We have a massive housing shortage. In 1970, a third of housing was affordable social housing. Now, if you are renting, on average you spend 32.8% of your income on rent, and in London, it is over 40%.
- Of course, the housing shortage makes homelessness a much greater problem than it was in the 1970s: 30% of homeless people have a job.
In addition, the cost-of-living crisis is expected to have a greater impact on those with protected characteristics. As reported by the Guardian, a recent study found disabled people, black and ethnic minorities are more likely to face disproportionately high living costs as a result of the “poverty premium” – when the poor pay more for essential goods and services.
New approaches needed for the current cost-of-living crisis
We are now faced with a new situation and one that is considerably different to the last time we experienced inflation and a cost-of-living crisis and we need new approaches.
For organizations that are committed to diversity and inclusion, this is a new challenge. How can you support the wider community, staff and your customers, suppliers and franchisers during these times and keep your business going?
Some of the actions you take will take time to bear fruit whilst others can be taken now and will create change immediately.
Take preventative action early to support staff
Overall, one of the most important actions you can take is to encourage everyone in your sphere of influence to raise it early if they are struggling. You are then able to take preventative action to support your employee before the situation worsens.
Check you have diversity policies in place
To be able to help most effectively, you will need to be prepared. You need to have financial wellbeing policies in place and know what resources you have available internally, as well as externally. You may want to undertake a diversity policy review to move beyond compliance only. The cost-of-living challenge needs both a strategic, long-term response and some shorter-term action.
EDI best practice response to cost-of-living crisis
Part of the necessary response to the cost-of-living crisis is already best practice in organizations’ diversity and inclusion implementation:
1) Make sure your workforce is representative of the community you serve at all levels
Ensuring that your recruitment is inclusive and that promotion is fair is critical to ensuring that those who may be from low-income households have an equal chance to succeed.
2) Engage in outreach
We work with many companies who do fantastic work with the community, e.g. acting as Stem Ambassadors, linking with local schools.
In 2021, the Mercedes-AMG Petronas Formula One Team launched its Mulberry STEM Academy with the support of EW Group Co-Founder, Jane Farrell. The five-year program with the Mulberry Schools Trust gives young people at the Trust’s schools the opportunity to learn in-depth STEM and gain insights from the Mercedes team, as well as access to career and insight days, work experience, mentoring and more.
Outreach is about levelling the playing field so that everyone is ready for opportunities. Outreach programs should ensure that under-represented groups are ready for opportunities as they come up.
Financial wellbeing policies to tackle the cost-of-living-crisis for employees
Here are three tips that you should also consider to develop new policies and approaches to support employees affected adversely by the cost-of-living crisis.
1) Communicate what you offer
The CIPD is encouraging every employee to develop a financial wellbeing policy. This includes helping people access advice and normalizing conversations about money. We have heard during and since the pandemic time and time again how employers have been thoughtful and helpful in supporting mental health. We should be able to use that learning to address the stigma of talking about money. We hear many stories of people being scammed and feeling ashamed that they have been the victim but if this is not talked about, more people will become victims.
Putting a policy in place and making sure you communicate it well may help many staff, e.g. your policy may mean that you offer interest free loans to staff — this may well be critical for some employees.
Childcare costs are a major driver of poverty so any help you can offer may make a substantial difference. Some may also be entitled to Universal Credit, and it could be helpful to point people to a benefit calculator. Of course, this is not ideal, but we work with some organizations who would not exist if this support for front line staff was not there.
Employers should also consider the national living wage and we encourage organizations to sign up to the Living Wage Foundation. It is important employers pay a wage that meets the cost-of-living, not just the Government’s minimum wage which is based on what it believes is affordable for businesses. The real living wage rates are independently calculated based on the essentials people need to live.
2) Provide support
Many organizations also provide support for customers in financial difficulty. This is, of course, vital for organizations providing essential services and it may be that other companies may also be able to introduce similar support. Being able to support customers now should pay dividends over time.
3) Take a whole system approach
Finally, EW Group were delighted to play a part in developing a plan for the London Recovery Board on addressing structural inequalities in London launched on May 25th. To take a whole systems approach, we would recommend employers look at the plan and implement as much of it as possible.
When faced with a problem like the cost-of-living, it is easy to feel that world events have left us powerless and there is nothing we can do or that we will get it wrong. I hope that this blog has shown that there is action inclusive employers can take, working collaboratively with their employees.