The past few years have seen a significant rise in the cost of living, impacting people across the UK. Here we explore why, the social and economic effects, and how both employers and individuals can navigate these challenging times.
When Did It Begin and What Caused It?
The cost-of-living crisis is generally considered to have started in late 2021. It’s characterised by essential goods and services rising in price faster than our incomes. Several factors which have aided the detrimental increase in the cost of living include:
- Post-Pandemic Demand: Following the COVID-19 pandemic, global demand for goods surged, outpacing supply and driving prices up.
- Energy Price Fluctuations: The UK’s reliance on market forces and limited gas storage capacity exposed it to higher energy costs.
- Brexit: Labour shortages and trade disruptions caused by Brexit likely contributed to inflation in the UK.
- Climate Change: Extreme weather events are disrupting food production, further impacting prices.
- The War in Ukraine: The ongoing conflict has exacerbated food and fuel price increases.
These factors combined caused a sharp rise in inflation, peaking at around 11.2% in October 2022.
The Human Cost
The impact of the cost-of-living crisis goes beyond numbers. It has significantly impacted people’s lives:
- Increased Poverty: Low-income households are disproportionately affected, with a larger share of their income going towards essentials. The percentage of people in deep poverty has risen.
- Strained Health: Food insecurity, reduced heating use, and increased stress can negatively impact physical and mental health putting additional pressure on an already stretched NHS.
- Social Issues: People have cut back on eating out and social activities, potentially leading to social isolation.
What Can Be Done?
While the situation is complex, there are steps we can take to alleviate the burden:
- Government Action:
- Long-term solutions: Investing in infrastructure and social security systems to enhance resilience.
- Responsible borrowing: Avoid excessive spending that could further strain the economy.
- Employer Support:
- Flexible benefits: Offering a mix of salary, bonuses, and benefits to cater to individual needs.
- Remote work: Reducing commuting costs and promoting work-life balance.
- Financial wellness programs: Equipping employees with budgeting, investing, and debt management skills (consider partnering with MySanté for debt advice).
- Salary adjustments: Regularly reviewing salaries to keep pace with inflation.
- Subsidised benefits: Offering discounts for healthcare, transportation, or childcare.
- Transparent communication: Keeping employees informed about company performance and external factors impacting costs.
- Employee Assistance Programmes (EAPs): Providing access to mental health resources.
- Individual Strategies:
- Energy efficiency: Simple measures like switching off standby appliances and using less hot water can reduce energy bills.
- Reduce food waste: Planning meals, understanding expiry dates, and utilising apps to avoid food waste can save money.
- Fuel efficiency: Planning journeys, carpooling, and considering alternatives like walking or cycling can save on fuel costs.
Santé Group Can Help
Santé Group understands the financial strains many are facing. We offer free and confidential advice to help businesses and individuals with affordable solutions from Employee Assistance Programmes, Health and Life Insurance, Cash Plans and Dental Insurance to our Health & Wellbeing app MySanté (which offers debt advice) and Employee Benefits platform SantéFlex. If you or your employees are struggling, contact us to discuss what solution might work best for you.
Conclusion
The cost-of-living crisis presents a significant challenge. Employers must look to support their workforce more than ever by ensuring that they have access and signposting to resources that can help them to take control of their financial, physical and mental wellbeing.
https://www.bbc.co.uk/news/uk-68625344 /
https://www.jrf.org.uk/uk-poverty-2024-the-essential-guide-to-understanding-poverty-in-the-uk
https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/october2022
