21 Oct 2022

The cost-of-living crisis hits women harder. Here’s how to help

While employers need to review their benefits in light of rising living costs, they also need policies to close the gender pay gap long-term

More women than men will be affected by the cost-of-living crisis. More women work part time, they hold 60% of below living wage jobs, and the Office for National Statistics reported a 15.4% gender pay gap in 2021.

Low pay means essential costs are a higher proportion of outgoings, as those on smaller salaries still have to pay the same for food, energy, accommodation, car insurance etc. Further price rises, especially for energy, now mean that for some, basic living costs are exceeding earnings.

While all low-paid workers will be affected, women living independently or in a position where they cannot share the rise in costs with other income earners, will be worst affected. Women also suffer from a gender savings gap both in short- and long-term savings, meaning that more women than men may not have sufficient financial buffers to see them through this crisis.

While employers will be focused on short-term support measures, there also needs to be a parallel longer-term focus on closing the gender pay gap and enhance career development and earnings for women.

This article considers practical steps employers can take to support those on lower wages, in particular women, during the cost-of-living crisis.

Immediate action - employee support

Data analysis
For immediate solutions, start by analysing employee financial wellbeing data. This will confirm the issues being faced by employees, their scale, and their impact on the organisation. Filtering by gender will identify if women have different needs.

Zero budget options
A lot of support can be provided to employees with little or no financial cost to the employer, all of which could be wrapped up in a financial wellbeing strategy.

Signposting employees to free services is a great start. There are plenty of websites to help with energy costs, including the government and Ofgem, as well as some that can provide debt advice, such as the MoneyHelper.

Put in place a domestic abuse policy. Domestic and financial abuse disproportionally affects women and the current economic pressures are only likely to add to this, so make sure you have safeguarding measures in place and highlight help such as Women’s Aid.

This may be a good opportunity to look inwards at other areas too:

Internal policies – Can these be improved? Especially those that incur a financial burden? Consider what can be introduced or eased (car sharing, expense reimbursement, cost of workplace social events).

Benefits – Review and recommunicate your benefits. Employees could be missing out on services that could reduce their financial burden. For example, in one organisation a financial wellbeing survey exposed that only 5% of employees used the discount scheme regularly, despite almost 20% finding it challenging to meet their monthly financial commitments. Employers can also use additional services such as pension providers’ financial wellbeing hubs. Analyse any gender bias in benefit take up, too. If women can’t afford healthcare policies, for example, this could affect the employer in terms of return-to-work timescales.

The review could also deliver cost savings to the employer, which could be reinvested in cost-of-living support.

Budgeted options

If you have budget, one-off, cost of living payments can provide immediate relief, but should be offered carefully as these can disrupt benefit payments and trigger higher tax for some employees. A more gradual, although potentially more costly long-term option, is committing to a ‘real living wage’, as defined by the Living Wage Foundation.

Providing bespoke financial education more tailored to employees’ needs will better show how to maximise value from your own benefit package, employee assistance programme and other resources.

There are also smaller, less obvious options to explore. Consider following Scotland’s lead and providing free period products for your female employees in the workplace.

Long-term - closing the gender pay gap

The cost-of-living crisis and the gender pay gap are deeply connected. The latter is an indicator of more women working in lower paid roles and not being able to progress their careers. Closing this gap and enabling women’s progression and earnings is critical for employers as part of their longer-term approach to the cost-of-living crisis.

Data analysis
Regulatory pay gap reporting only provides data at an organisational level. Segmenting data by factors such as age and job grade will help pinpoint which groups are experiencing higher pay gaps and allow you to direct resource and action planning more effectively. Overlaying quantitative data with qualitative data from an employee listening project will hone this further.

Benchmarking data against competitors and industry will provide insight for talent management – women who were sacrificing pay for flexibilities or proximity to home may now be forced to look to employers offering better pay, training and career development. Losing women will turn the clock backwards on closing the gender pay gap and impact cognitive diversity – a key element of business success.

Reducing the gap
Backing The Fawcett Society campaign on ending salary history is a good place to start with recruitment. Review internal pay structures and the pathway for promotion – widen job descriptions, enable flexibility and scrutinise the impact of visibility on promotion rates in the current era of hybrid working. Bridge the gender pension gap. Commit to policies that enable women, such as childcare, menopause policies and career coaching and mentoring.

Employers need to ask themselves if more can be done to close the pay gap, more quickly. Barnett Waddingham has helped organisations analyse their gender pay gaps. To find out how it it can help you do the same, visit its website.