The undeniable impact of recent geopolitical events has meant that we are now faced with a once in a lifetime cost of living crisis unseen by British business and its workforce alike. According to the ONS, productivity was 1.0% lower in Q2 2022 than in the previous year, on top of a drop of 0.8% in Q1, exacerbated in no small part by a damning cost of living plight.
A new landmark report from consultancy firm, Theta Global Advisors, has revealed the severe stress Brits are facing in their personal lives has had an undeniable impact on their work. Nearly 1-in-4 British respondents (24%) reported they’re now less productive at work due to stress from the cost of living, which applied to ONS working population figures equates to a staggering 7.6 million Brits.
This marks another concerning development amidst the cost of living crisis, as people’s spending power is decreasing, their ability to simply earn a wage is also being significantly affected. Highlighting the extent of this issue, leading personal finance app, Hyperjar, found 25% of Brits now even state that being responsible for their family finances is their biggest mental health strain.
Theta Global Advisors’ research also found that almost half (46%) of Brits state their employer has not done enough to help them with the cost-of-living crisis, and as a result, there has been a significant rise in “quiet quitting” with a further 29% reporting they’re actively looking for another job with higher pay. This brings concerns for UK employers surrounding the long-term survival of their organisations as wages in the private sector already grew by an average of 7.2% earlier in the year.
As British employees demand higher salaries, Andrew Bailey, Governor of the Bank of England warns employers that increasing wages will create a negative cycle which academics call the “wage-inflation spiral”. This could worsen inflation conditions across the UK as companies continue to raise prices to protect their profits. However, if organisations don’t take some form of action to support their employees, the success of UK business stands in jeopardy.
Serving as testament to this, The Harvard Business Review conducted a study in 2021 which found nearly 50% of employees left their roles due to poor mental health, which severely impacting productivity as a result. There is already evidence of employees reaching the end of their tether in the UK with the recent strikes from rail workers, criminal barristers, and warnings of industrial action in sectors such as nursing, education and transport as they all seek pay rises in response to the increasing cost of living.
Founder and CEO of Theta Global Advisors, Chris Biggs, comments on the change in productivity over the past year
“Our research highlights the latest concerning trend amidst the cost of living crisis – not only are people struggling financially, but now their ability to earn a wage is also being affected caused by the stress of the current situation. As the value of real wages continues to decrease across the UK, many workers are understandably turning their gaze towards jobs with better pay.
“Nearly half of the UK workforce feel that their employer isn’t doing enough to help them through this time, which is resulting in an increasing number of people ‘quiet quitting’ in search of more support elsewhere. Despite rising inflation and the cost of living, the UK job market remains strong with high demand for skilled and unskilled workers, meaning employers should carefully re-examine their salary structures accordingly or they’ll risk losing staff.
“Flexible working schedules are another powerful tool to increase retention and create an attractive company culture with our research highlighting many workers still prioritise a healthy work-life balance over a high salary. At this time, listening to the different needs of your staff and updating benefit schemes accordingly will be crucial for retention. By guiding your team through their concerns and doing your best to offer the necessary support, it will allow them to focus more on their job and ultimately keep productivity up.”
