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The Cost of Living Crisis

The current cost of living crisis is more than an economic problem – it presents considerable and far-reaching challenges to the health and wellbeing of individuals and to communities across Wales.

Mind UK suggests that there is a clear relationship between mental health and money,Poor mental health can make earning and managing money harder. And worrying about money can make your mental health worse.”

The cost of living crisis has the potential to impact on individuals in a number of ways:

  • Financial insecurity can impact on the ability to buy essentials like food and clothing.
  • It has the potential to impact on living environments, for example being able to afford to put the heating on or keeping up with rent or mortgage payments.
  • The chronic stress that comes from having insufficient income to afford these necessities can lead to or exacerbate mental health issues such as anxiety and depression.
  • It can also create or worsen physical health issues, such as increased blood pressure or a weakened immune system.
  • In addition, individuals may ‘self-medicate’ and use food, alcohol, or tobacco to help them feel better.
  • The cost of living crisis will affect many people but the impacts are likely to be greatest on those who are already faced with health or other challenges.

The relationship between good health and good quality fair work has positive benefits for both employees and the organisations they work for. There is now a wealth of evidence to suggest that a healthy working environment can improve the health and wellbeing of the workforce, and thus may act as a buffer at times of crisis. In addition, a healthy and motivated workforce can ensure quality and productivity, thus enabling the organisations they work for to survive and thrive.

Why Employee Financial Wellbeing Matters

The Money and Pensions Service (MaPS) report that almost eight in ten UK employees take their money worries to work, with the Chartered Institute of Personnel and Development (CIPD) highlighting that one in four people report money worries affect their ability to do their job. Even before the soaring cost of living started to make the headlines, one in eight workers in the UK already lived in poverty. Now, many more will struggle to maintain a decent standard of living.

There is a direct correlation between healthy (mentally, physically, and financially) employees and improvements in staff productivity, staff retention, sickness absence and performance. Public Health Wales has published a report on Cost of living crisis in Wales: A public health lens. The report provides insights into the long-term impacts faced by individuals and suggests ways that employers, can help to mitigate some of the challenges that they face. The report notes that the ‘cost of living crisis’ is also increasing the ‘cost of doing business’, putting many employers, particularly small businesses, under additional strain. However, as an organisation’s workforce remains its most vital asset, employers can support their employee health and wellbeing, with resulting positive impacts on their own business.

What Employers Can Do

The Chartered Institute of Personnel and Development (CIPD) has developed a Cost of Living Hub containing a range of suggestions and resources for employers to support their employees during the crisis and around managing the consequences of ongoing in-work poverty. The Hub contains training for managers to provide the right support to staff, including in-work progression, consideration of fair and real living wages, and examples of employer action on financial wellbeing.

Become a Fair Work Employer

Fair Work is defined, by the Fair Work Commission as where workers “are fairly rewarded, heard and represented, secure and able to progress in a healthy, inclusive environment where rights are respected”. Employers have a key role in improving access to fair work by making sure that they offer jobs with decent pay (fair reward), involve employees in decisions about their work, are flexible to employee needs and provide healthy environments. This can support employees to stay in work, reduce their stress and improve their overall wellbeing.

In addition, we believe employers can make an extra effort to understand their employees’ needs and circumstances. They should identify ways to support their employees’ financial wellbeing, and help to break down any barriers preventing them from securing a real living wage.
 

Managing Redundancies and Changes to Working Practice

The cost of living crisis is also increasing costs for businesses, putting many employers, particularly small businesses, under additional strain. Unfortunately, this may result in some businesses in Wales having to reduce staff numbers, change working practices, or reduce hours, or shut down, leading to unemployment.  

Job loss has been shown to increase unhealthy behaviour (such as smoking and drinking) among individuals, as well as result in higher anxiety and depression. This is associated with an increased risk of death from suicide, alcohol-related diseases, heart attack and stroke. It also has negative impacts on workers’ families and communities. Managing the process of redundancy well can significantly mitigate these negative impacts. 

Redundancy is a form of dismissal that can happen when employers need to reduce their workforce. ACAS has developed a step-by-step process for managers considering making employees redundant. In addition, SAMARITANS Cymru has developed a toolkit to help managers and other employees to develop compassionate approaches at work to assist them when dealing with someone who is experiencing emotional distress.

When an event, such as the cost of living crisis, impacts on a number of employers across a range of sectors, Public Health Wales has developed recommendations for how employers can work with partners within their communities to reduce the impact of mass unemployment. Employers can be part of a multi-sector response that considers re-employment, financial, and health and wellbeing support. The recommendations suggest paying particular attention to specific groups, such as older and unskilled workers, and extending support to family members. 

Support Employees with Money Stresses

There are a number of actions employers can take to support employees to address some of the financial impacts of the cost of living crisis: