The same, but different…

The cost of living crisis is now even more intense for some employees and their families…

My first ever Howden blog post was written exactly 2 years ago today. And to mark this milestone we have refreshed the blog landing page, now hopefully making this blog more visible, and improving the layout and experience for the visitor too. 

Of course much has happened in the two years (and more than 120 blog posts) since that original item, with the most notable issues being the arrival of a global pandemic, and the conclusion of 5 years of Brexit hiatus too. 

Yet by the same token many of the employment and workforce challenges being experienced in January 2020 remain remarkably constant. 

Indeed that very first post was themed around the perilous state of many employees’ finances. This remains an important subject, and one that is sadly picking up an even greater momentum in 2022.

Cost of living

Indeed it was only a few weeks ago that I posted this item on the financial challenges for employees, and by extension employers too. 

Yet even in that short period of time the situation has changed rapidly.  The rate of inflation now stands at a near 30 year high, and looks set to go even further in the weeks and months immediately ahead. 

But the national inflation figures don’t tell the full story.  Firstly it is important to note that the headline measure of UK inflation is now the Consumer Prices Index (CPI), which takes no account of housing costs.  Whereas the old (and still more familiar to many) Retail Prices Index (RPI) also includes mortgage interest payments, and is much higher still at 7.5%.

And if that hasn’t depressed you enough, it’s worth remembering that neither of these measures allow for the variance in individual household circumstances. 

The low paid

Of course virtually every level of employee – from CEO to office cleaner – are facing increased costs on their everyday spending.  But some are feeling the problems far more than others.

For a better-off household may well be able to control their expenditure – even in a time of high inflation – by switching some of their spending from premium to “own” or “value” brands during their regular supermarket shop. 

Yet that flexibility is clearly not available to those that were already forced by financial necessity to buy from “value” ranges anyway. Such households are therefore extremely exposed to any price increases on these basic, but essential, items.

Enter Jack Monroe, a well-known budget food chef, author, and anti-poverty campaigner.  She raised the issues of increased prices in supermarket value ranges in a recent Twitter thread.  That thread has been viewed by more than 15 million people in the UK, and has even led to the Office for National Statistics (ONS) to indicate that they will change the way they calculate inflation in the future too.    

Monroe’s central argument is that prices are increasing far more rapidly on value ranges than they are on premium priced products. In particular she highlighted the increase in the following prices:

• Baked beans (+45%)
• Canned spaghetti (+169%)
• Bread (+29%)
• Curry sauce (+196%)
• Small apples (+51%)
• Peanut butter (+142%)

It follows that working households already forced by financial circumstance to buy from a value range are facing some rather stark choices as to how they can continue to put food on the table for their families.

The same, but different…

So much has changed in the last two years of this blog, not least the way it now looks. 

Yet many of the fundamental employment and workforce challenges remain, and clearly the growing pressures on employee finances is something that many more employers now need to understand and respond to.

So we would strongly encourage employers to establish and promote both Financial Wellbeing and Financial Education programmes in 2022 and beyond.

For more information on any of the above topics, please speak to your usual Howden Consultant in the first instance, or visit our website for other contact options.  

(Published 31/01/22)