The Worldwide Cost of Living (WCOL) study by the Economist Intelligent Unit (EIU) has found that the rate of inflation is at the fastest recorded over the past five years and has surpassed pre-pandemic levels rising by 3.5% year on year. The study, an annual staple for over 30 years, is designed to enable HR and finance managers to calculate cost-of-living allowances to build appropriate compensation packages for employees.
Asian powerhouses Hong Kong, Singapore and Osaka rank in the Top 10 most expensive cities worldwide based on the WCOL. Yet, they are not immune from the soaring cost of living. In Hong Kong, the Consumer Price Index was up 1.2% year on year in January whilst Singapore saw year on year increase of 4% during the same period. Consequently, companies are combatting rising prices by extending above-average pay increases for the coming year.
Deloitte’s Global Millennial Survey noted that almost half of millennial and Gen-Z workers are worried about their financial future and almost 40% are concerned about their day-to-day finances. This has a knock-on effect on their mental well-being and productivity at work. A number of studies have demonstrated a link between financial worries and mental health problems such as depression, anxiety and substance abuse. Increased stress from finances causes a downward spiral of interlinked actions resulting in increased financial worries and declining mental health.
An increased concern
As a result, leaders who choose to ignore income and wealth gaps, both in society and within their business, run the risk of alienating the very employees that their organisation needs to succeed. According to a survey of more than 500 HR-decision makers conducted by GRiD (Group Risk Development), a UK industry body for the group risk protection sector, more than 50% of respondents felt an increased responsibility for their staff’s financial well-being.
Though salary rises may help the employees with their cost-of-living crisis, they may not be beneficial to employers themselves who are feeling the effects of a downward economy. Yet, salary raises are not the only incentive that employers can offer to alleviate their staff’s financial concerns. One way valuable and easy to offer at low-cost measure is by offering employees financial wellbeing support.
This support could take the form of financial education programmes or providing staff with benefits that can help them to budget accordingly. Additionally, company ‘lifestyle’ benefits such as gym membership and corporate partner discount codes can also positively impact an employee’s financial health. Correspondingly, it is better for business leaders and HR to anticipate that there are employees within their organisation that are suffering from financial related problems and to take preventative actions.
Creating a culture of openness surrounding money can help employers to deal with issues before they overwhelm workers and start to impact their productivity levels. Furthermore, enabling one-to-one meetings between managers and team members can help staff to feel more comfortable about raising financial concerns. Additionally, guidance meetings in regard to employee benefits such as pension contributions, are a simple and effective way of helping employees and setting them up for long-term financial security.
Paul Arkwright
Publisher
