How are your employees coping with inflation rate hitting its peak?
News Industry News
Cost-of-living crisis is real
How much should a family of two adults and two school-aged children earn to live comfortably in 3 largest cities New Zealand?
- Christchurch: $112,822 annually before tax
- Auckland: $162,600 annually before tax
- Wellington: $165,320 annually before tax
Sounds ridiculous, but it’s real!
Statistic NZ’s second quarter consumer price index (CPI) revealed in July annual inflation was at 7.3 percent – the highest in three decades. It’s believed to be driven by rising rents and construction costs. Even though an expert is confident that inflation has peaked, they warn us not to expect consumer prices to fall significantly anytime soon.
The cost-of-living crisis is now putting financial stress on Kiwis across Aotearoa New Zealand. A number of studies have demonstrated a cyclical link between financial worries and mental health problems such as depression or anxiety. Financial problems adversely impact your mental health which subsequently makes it harder to manage money, and this cycle may go on and trap you in a downward spiral of increasing money worries and declining mental wellness.
You play an important role!
It is more important than ever for employers and HR professionals to support employees through the cost-of-living crisis!
Many people would have thought the solution is to pay people more to help them keep up with the higher prices, without realizing that by simply doing that we are much more likely to be in this inflationary cycle for longer. Higher wages get passed on to customers through higher prices and the wage-price spiral accelerates. Keep in mind that employers are also financially and economically adversely affected by this crisis.
It is the small things that can make big difference.
Supporting your employees with their costs
In order to help your employees with the cost of groceries, consider free or subsidised meals, snacks and drinks (coffee and tea).
- Is your office capable of providing fridges, mircowaves, and workplace cooking facilities to enable your employees to pack lunch instead of spending on takeawyays?
- Is there any partnership with local cafes, restaurants, or gym you could establish to have discounted meals or gym services for your staff?
- Are you providing free feminine hygiene products?
- Are you able to offer health and wellness allowance to all employees?
- Have you proactively encouraged biking-to-work days or carpooling for better health and wellness and reduction of commute cost?
Some other financial support could include rental deposit scheme offering, accommodation subsidies, extra annual leave, etc.
Educate your employees about the organisation’s support
If your organisation provides EAP (Employee Assistance Programme), make sure your employees are fully aware of their benefits and what services they can access. Some employees only consider accessing an EAP if they are dealing with grief or mental health challenges and may need reminding that they may be able to access financial education or advice through EAP.
You should also clearly communicate all other support they are eligible for, such as discounts programme, free gym facilities, workshop or training. Financial literacy workshops are highly recommended to provide to your employees during the cost-of-living crisis to help them better manage their budget.
Encourage flexible working arrangements and flexible work support
With the rise of travel cost – people are paying an arm and a leg just to fill up a car, it is recommended that hybrid and remote working is implemented in the workplace. Flexible work is highly appreciated especially by working parents who struggle to balance their work and childcare responsibilities. Extra maternity leave or paid leave for caring responsibilities is also an option.
Employees who work from home despite cutting down on commuting costs may face a rise in power and internet bills. Additional support you could provide may include: power payments, broadband cost-sharing, home office equipment.
Rather than get stuck in an endless argument about pay rises for everyone, you may consider offer their time back while keeping their pay the same. 4-Day Week has gained an amount of success and proved that this initiative could work for both ends – employers and employees.
Learn about your employee to better support their financial and mental wellbeing
The first step to implement any financial support program is to understand where your employees are standing at and how they are feeling? With Gen Z entering the workforce, most organisations will have a diversity of different generations, and accordingly, personal values within the company. We should not assume the stereotyped needs for each generation, but it may be beneficial to conduct a wellbeing and cost-of-living survey to thoroughly comprehend your employees’ priorities.
Financial literacy or wellbeing programmes are better planned and implemented with a good understanding of the values driven behind your workforce. You could also promote a healthy work-life balance to encourage people to take reasonable annual leave or provide them with mental health days.
Employers already play a vital role in employees’ finances as they pay salaries (and bonuses), and often contribute to KiwSaver, medical insurance, or retirement savings plans. The next logical step should be helping your people effectively manage their finances and empowering them to better understand and address their financial concerns.
Show your recognition and appreciation towards your employees
It has been a tough time for everyone, and we are all striving to keep the ends meet. It is important that your employees feel heard, understood, appreciated, and empowered.
One of the best ways to show appreciation for your employees is to pay them more, but if understandably, you aren’t in a position to introduce a pay rise, have a look at other options such as:
- Employee recognition – Staff of the month
- Company “town hall” meeting
- Having award certificates
- Offering free lunches
- Saying thank you more often
It is well understood that although supporting employees’ cost with subsidies and cash allowances are great initiatives, there may be a burden of administration, or it may not be a sustainable way for business in the long run. Some businesses possibly cannot afford it. Let’s get creative, we can best support our people by checking in with what they really need and ensuring that they are aware we are not leaving the financial wellbeing behind in any wellbeing strategy.
Start a conversation with your people and see what will make a difference for them, and what will help them the most, aside from increasing their take home pay. Whatever we do, we should make sure it’s sustainable for both sides. If they have non-work commitments such as childcare, sit down and discuss with them about your capability to build flexibility into work arrangements.
We may expect an increase in people picking up secondary employment to make their ends meet. HR professionals need to provide support to the employees while managing the situation (such as involvement of conflict of interests). The employment contract should clearly state the possibilities of any conflict of interests and how to best manage them. Employees should be transparent about the secondary employment to both employers, and must make sure they meet their responsibilities to their employers and keep everyone safe at work. Having two jobs increases the possibility of employees being burnt out, so HR professionals should do their diligence to provide any health and wellness support wherever possible. It is important to frequently check in with these employees.
Take care of yourself
Last but not least, it is important to remember that you are not excluded from living-cost pressure, nor the financial struggle from it. You cannot pour from an empty cup – understand your boundaries, care for your wellbeing, manage your financial budget before offering help to your employees.