The UK is well and truly in the grip of a major cost of living crisis; the first since 1974. According to the Financial Times, consumer confidence in May this year was at its lowest for 48 years. There is one main reason for the crisis – Lockdowns – the huge disruption to supply chains, coupled with the massive money printing by governments has created a double whammy for high inflation and it’s having a devastating impact on people in the UK.

As well as the impact on people, the cost of living crisis is also having an impact on businesses. They, too, are affected by rising energy costs and inflation. Soaring energy costs and inflation have seriously squeezed already tight budgets. But in reality, this is not the only challenge businesses are facing right now.

Attracting and retaining staff is equally difficult. Competition for talent is overwhelming and with reports suggesting that one in three employees is considering applying, or have already applied, for a new job, keeping up with expected pay levels is becoming a headache for many businesses.

Staff recruitment and retention is a challenge

Reed’s statistics revealed that for one in three workers, the main motivation for changing jobs is an increase in salary. Yet 40% of those workers would stay with their current employer if they received a higher pay offer, further cementing the key reason for a job move.

Whilst there are reports in the news that some employers have either increased staff salaries across the board, or dished out bonuses to help their workers with the cost of living crisis, the majority of businesses are not in a position to do this. However, salary increase or not, for businesses it’s almost impossible to ‘fill’ the financial gap between take-home pay and increased outgoings.

With such pressure on a business’s finances, many medium-sized companies are revealing that recruitment and retention of staff is one of their biggest threats in 2022. This is likely to fall into next year as well as there is no end in sight to the cost of living crisis.

The impact on employers and employees

On the recruitment side, businesses are finding they have to increase their offered salaries to attract the right qualified talent. The problem is that long-term these levels of pay may not be sustainable, or will cause a secondary impact on other employment benefits.

From the staff retention aspect, employees are driven to find higher paid jobs which has an indirect impact on the growth of the business. What’s even more worrying is that salaries in some industries, such as retail and social care, are lower in real terms than in 2021.

However, there are actions companies can take to combat the challenges of the cost of living crisis.

A hybrid working environment

A leftover from the Covid-19 lockdowns, a hybrid workplace is still popular but for different reasons. The offer of flexible and remote working opportunities allows employees to cut down on travel costs and other expenses related to being office-based. Indeed, recent statistics revealed that 45% of workers surveyed are pushing for more remote working options to save on commuting costs.

For employers, it provides the potential to reduce their overheads, such as lower energy costs.

Review employee benefits

Whilst employee benefits are popular, staff may be willing to drop the gym membership in exchange for an increase in salary.  Salaries and staff benefits are one of the highest outgoings for businesses; reviewing where savings can be made and reducing the number of benefits, even if in the short-term, can help save costs.

Alternatively, change the benefits for staff to something that is more applicable to the current economic crisis, such as a discounts platform. Some retailers are helping businesses (and themselves!) by offering staff discounts or cashback schemes in many of their stores.

One-off bonus

Rather than a more permanent pay increase, consider a one-off bonus to help employees during the cost of living crisis. Whilst it’s an outlay short-term, long-term it has the benefit of helping your staff which encourages them to stay with the company. In addition, it boosts motivation and staff loyalty, often resulting in higher production rates, and happier employees.

An alternative to bonuses could be a food bank scheme within the company, or offer staff free food when they are in the office.

The cost of living crisis, energy bills going up and the price of food increasing, particularly on essential items, is a strain on everybody. But with a little lateral thinking, there are steps employers and employees can take to help ease the burden.

At Auxato, we are very much aware of how the current economic crisis is affecting people across the UK. So, if you’re looking for the right applicant or have a role in marketing PR or communications, let Auxato take the strain and help you find your next perfect employee/job in a cost-effective, streamlined way.

Auxato is a leading UK executive search and recruitment consultancy specialising in sourcing the best communications and marketing professionals.