How To Support Employees During The Cost Of Living Crisis

 

The cost of living crisis continues to place significant financial strain on UK workers. In 2025, inflation remains volatile, energy prices have surged again, and everyday expenses - from housing to groceries - are at an all-time high. With financial uncertainty becoming a persistent challenge, employers must take proactive steps to support their workforce.

Supporting employees during this time is not just a moral obligation - it is also crucial for maintaining productivity, engagement, and long-term retention. Here are some key strategies businesses can implement to help their employees navigate the financial pressures of 2025.

 

1. Reviewing Salaries and the Real Living Wage

With rising living costs, salaries that once seemed competitive may no longer be sufficient to cover basic expenses. Employers should consider:

• Aligning salaries with inflation – Regular pay reviews can help ensure wages keep pace with the cost of living.
• Adopting the real living wage – Unlike the government’s National Minimum Wage, the real living wage is independently calculated based on what employees actually need to get by. Companies that implement this voluntary wage demonstrate their commitment to fair pay.
• Offering targeted financial support – Some businesses have introduced cost-of-living bonuses or hardship funds to provide temporary relief to employees facing financial difficulties.

By ensuring salaries are competitive and reflective of economic realities, businesses can reduce financial stress and improve employee satisfaction.

 

2. Expanding Financial Wellbeing Support

Financial literacy is becoming increasingly important, yet many employees lack the knowledge or resources to manage financial challenges effectively. Employers can play a key role by offering:

• Workplace financial education – Seminars on budgeting, debt management, mortgage planning, and retirement savings can empower employees to make informed financial decisions.
• Access to financial advisors – Partnering with financial professionals to provide one-on-one advice can help employees create personalised financial plans.
• Employee Assistance Programs (EAPs) – These confidential services offer financial counseling, mental health support, and debt management advice to employees in need.

By improving financial awareness and providing practical support, businesses can help employees feel more in control of their financial future.

 

3. Reviewing Pension Contributions and Long-Term Financial Benefits

Pensions remain one of the most valuable employee benefits, yet many workers struggle to prioritise retirement savings during a financial crisis. Employers should consider:

• Matching higher employee contributions – Encouraging long-term savings by matching any voluntary overpayments up to a set percentage.
• Providing clear pension education – Many employees do not fully understand their workplace pension scheme. Offering workshops or online resources can help them make informed decisions about their retirement savings.
• Exploring salary sacrifice options – Allowing employees to make pension contributions via salary sacrifice can reduce their taxable income and increase take-home pay while boosting retirement savings.

Ensuring employees understand and can maximise their pension benefits provides both short-term financial relief and long-term security.

 

4. Offering Flexible Working and Cost-Saving Perks

The cost of commuting, childcare, and daily expenses continues to rise. Offering greater flexibility and workplace perks can help employees cut unnecessary costs. Employers can support staff by:

• Expanding remote or hybrid working options – Reducing commuting costs and allowing employees to work from home when possible.
• Providing commuter benefits – Offering discounted travel passes, fuel allowances, or cycle-to-work schemes to help with transportation costs.
• Supporting working parents – Reviewing parental leave policies, subsidising childcare, or offering flexible working hours to accommodate childcare responsibilities.

Simple adjustments to working arrangements can make a significant financial difference to employees.

 

5. Addressing Employee Wellbeing Beyond Finances

Financial stress often leads to mental and physical health challenges, including anxiety, burnout, and decreased productivity. Employers must take a holistic approach to wellbeing, ensuring that support extends beyond financial assistance. Consider:

• Mental health resources – Offering access to counselling services or mental health days to help employees cope with stress.
• Subsidised health and wellness programs – Providing gym memberships, wellness apps, or private health insurance can improve overall wellbeing.
• Encouraging open conversations – Creating a supportive workplace culture where employees feel comfortable discussing financial concerns without stigma.

By prioritising employee wellbeing, businesses can create a healthier, more engaged workforce despite external economic challenges.

 

Final Thoughts

The 2025 cost of living crisis continues to impact workers across the UK, making it more important than ever for employers to take action. Fair pay, financial education, long-term benefits, flexible working, and holistic wellbeing support are all essential strategies to help employees manage economic uncertainty.

By implementing these initiatives, businesses will not only support their workforce through challenging times but also strengthen employee loyalty, retention, and overall productivity—creating a more resilient and committed team for the future.

 

If you’d like more advice or support please get in touch with our expert team on 0115 786 0443 or email via opportunities@source-talent.co.uk.