A perfect storm of staff shortages, withdrawal of government support schemes and increased absence due to illness threaten a difficult few months ahead. HR professionals can support both the business and the workforce through this in a number of ways, says Steve Herbert.
The clocks have gone back, the nights are drawing in, and the nation is bracing itself for another pandemic winter.
Yet the current set of employment concerns extend far beyond the health threats of Covid, and it is now becoming apparent that economic issues pose a very real challenge to both employees and employers alike.
And despite an unexpectedly upbeat budget speech from the chancellor last week, the underlying economic problems remain very real indeed.
So what are these concerns, and how can HR professionals help combat them?
Supply chain shortages
Supply chain issues are becoming a major concern, and have been driven by the surge in demand following the reopening of the worldwide economy.
Yet there are also more local supply chain problems too, and chief amongst these is a shortage of available labour following the departure of many EU workers in recent years.
Either or both of these issues can make it difficult for employers to fulfil orders and return to their pre-pandemic business footing.
Fuel costs
Another major concern is the very unwelcome increase in the cost of fuel.
It became apparent in September that heating and energy costs were escalating way beyond usual levels, and in August alone gas prices increased by an astonishing 70%.
The cost of fuel for motoring and logistics has also been rising sharply (and is now at a record high), just at the nation is collectively seeking to return to the physical workplace.
And rising fuel costs are more than just an inconvenience.
For the price of fuel adds cost to any service that requires delivery via the UK roads network, so will certainly add to price pressures in the months ahead. The Bank of England has already warned that inflation could reach 4% by the end of this calendar year.
Costs are increasing, and at the other end of the scale we have personal and corporate budgets contracting.
End of government support
Two government-supported schemes have come to an end in recent weeks.
On the one hand we have the end to the temporary Universal Credit (UC) uplift, which has reduced the income of some 5 million households by more than £1,000 per year. While it’s true that the chancellor’s changes to the UC taper from 1 December will reduce the numbers impacted, more than half of claimants will remains worse off.
On the other, we have the end to the Coronavirus Job Retention Scheme (CJRS) adding further pressures to many household and corporate budgets.
Impact on spending
In April 2022 both employees and employers will face a significant increase in National Insurance contributions.
The reality is that all of the above factors contribute to a perfect winter storm of financial pressures, and will reduce the “discretionary” spending budgets of many employees and their employers in the months ahead. This represents a major headwind for a UK economy still largely driven by consumer spending.
With all of these pressures, many employees will genuinely be struggling to make ends meet in the winter ahead, and therefore looking to their employer for increased pay to help combat this issue.
With all of these pressures, many employees will genuinely be struggling to make ends meet in the winter ahead.”
Of course the Budget announcements of above-inflation increases to national minimum wage requirements will help some families, but may also result in increased pay demands and expectations from those on higher salaries too.
These are extra costs that so many employers are badly placed to absorb after 18 months of pandemic restrictions.
Yet not to do so risks losing valued employees. And with a currently very limited supply of available, experienced, and qualified candidates, many employers might feel that they have little choice other than to make those significant pay awards.
Cost-effective retention
So how can HR professionals support the business in these challenging circumstances?
A good starting point might be to look again at retaining existing employee talent. The first step in that process is to ensure that all line managers understand the importance of employee retention.
Having made that case, HR should then also aim to equip those line managers with the tools they need to reinforce that retention messages with their employees.
This exercise should include a reminder of the benefits of continued employment, and an indication as to likely career progression prospects. It might also be useful to highlight the potential risks of changing employment at this time.
The lessening of some employment rights in the first two years of a new employment are often not widely known by workers, but once understood may deter at least some employees from looking for employment elsewhere.
Likewise, a change of employer could result in the loss of some really important – but often overlooked – employee benefits.
The health crisis of the last year has demonstrated just how important benefits such as group life assurance, group income protection and private medical insurance can be, providing valuable protections to the employee and his or her family.
A change in employment could easily result in a break or loss of these important protections, and this is certainly worth highlighting to employees.
Financial wellbeing
Last but certainly not least, employers may not be able to make significant pay awards, but they can probably find a little money to help employees manage their current finances better.
As I explored in this article for Personnel Today last year, there are some simple and cost effective steps that employers can take to help workers manage their money better.
Such lessons will continue to prove useful long after the bleak midwinter – and the challenges of the pandemic – are both long forgotten.
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