How can employers support staff with continued high costs of living?

In January 2925, Water UK announced that the average water bill for households in England and Wales would rise by 26% to over £600 per year from April, demonstrating just one aspect of everyday life that is still impacted by the cost-of-living crisis.

Meanwhile, Zest’s February 2025 research found 67% of employees aged 18 to 34 said the high cost of living means benefits packages are more important when deciding where to work, presenting a chance for organisations to ensure their offering meets employees’ needs.

Today’s financial challenges

Many of the financial challenges today have been the same for the past few years. Food, utility and energy costs remain high, especially with upcoming rises this month, and mortgage rates have only slightly decreased since soaring previously.

Nursery and childcare prices also remain considerable for parents, and travel and fuel costs are an issue as employees return to the office, says Natasha Newby, employee benefits director at employee benefits firm Ilumiti.

“The uncertainty that exists with ongoing crises in Ukraine and the Middle East, plus the unpredictable nature of the US presidency, are making people nervous about the future and what these may mean for finances and long-term prospects,” she says.

Zest’s aforementioned research also found that 51% of employees aged 18 to 34 were worried about increased housing costs, while 42% want more financial support for childcare. Meanwhile, the end of fixed-rate mortgage deals has led to increased monthly repayments.

Cheryl Clements, head of business development at Tusker, says: “Wage rises haven’t kept pace with rising living costs. This means some employees who are just managing are squeezed or feel they have no choice but to increase debt. They are likely to be under a lot of strain, potentially impacting their health and how they show up at work.”

Current employer support

It is essential for employers to provide both short- and long-term support to address financial pressures effectively. Pay increases and one-off bonuses, which many employers initially awarded to staff to combat the cost-of-living crisis, may provide immediate relief, but do not always address long-term difficulties, and can be unsustainable to maintain.

A comprehensive employee benefit package that includes support for many areas can ease the strain.

Kelly Tucker, founder and managing director of consultancy HR Star, says: “Employee assistance programmes have been a lifeline, offering access to financial advice, debt management services, and mental health support. Organisations are partnering with local retailers or using benefits platforms to provide discounts on groceries, fuel and healthcare, allowing employees to stretch their budgets further.”

Flexible-working arrangements allow employees to better manage and save on commuting and childcare costs, while gym memberships and other health initiatives can help them keep active, provide a stress-relieving outlet and offer help with day-to-day costs.

“A health cash plan is a low-cost tangible benefit, offering financial help towards optical care, dentists, osteopathy, reflexology, health screenings, prescriptions and flu jabs,” says Newby. “Private medical insurance and group life assurance can often offer ancillary benefits, such as smoking cessation and nutrition support, enabling people to live healthier lives.”

Financial assistance

Zest’s research found that 71% of employees called for more employer financial support and 68% want more essential expenses help, so there is scope for organisations to explore this. However, it can a challenge for those wanting to attract and retain staff to provide support without a huge cost.

Employers are now focused on providing employees with tools to better manage their money, says Jonathan Watts-Lay, a director at Wealth at Work. “It’s good to see that support is growing for savings products to build financial resilience, such as workplace Isas [individual savings accounts],” he says. ”Financial wellbeing benefits should help employees feel financially secure, whether they are a new parent managing childcare costs or saving for a first home.”

As mortgage rates and rents rise, employers can also offer access to mortgage brokers or financial advisory services, and support with utility bills by negotiating discounted rates or flexible payment options; all of which can help to reduce the strain on employees.

“Offering direct financial support for housing-related costs could ease burdens,” says Tucker. ”Employers should also consider subsidising transport costs, whether through discounted rail tickets, fuel allowances, or contributions for public transport. By allowing employees to choose benefits most relevant to their needs through flexible benefits packages, such as additional healthcare cover or access to financial planning resources, employers empower their workforce to take control of their financial health.”

Early access to earned wages can help, along with tailored benefits that align with challenges employees are grappling with. Practical financial guidance and education through webinars and one-to-one sessions on how to budget can save employees money and help them secure a better financial future.

“While short-term relief through reloadable discount cards, wellbeing allowances and bikes-for-work schemes is important, these should be paired with long-term initiatives to help make employees more resilient,” says Newby.

Tax-efficient support

Salary sacrifice arrangements can help employees take home more income each month, for example, through an electric car salary sacrifice scheme. Offering an electric vehicle (EV) at a fixed price can also help with the cost of living by reducing motoring costs. 

“An arrangement which passes back some, or all, of the NI savings that the organisation makes means the scheme becomes even more affordable for the employee,” says Clements. ”Maintenance, insurance, breakdown cover and tyres are covered in the monthly scheme cost. As the cars are accessed through an employer, employees don’t need a deposit, or worry if they resign, get made redundant, are off due to a long-term sickness or go on maternity leave, as the car is handed back with no cost.”

As the cost-of-living crisis shows no sign of ending, it is important that employers continue to support staff with rising costs through their employee benefits packages.