Monzo is set to give its lowest-paid staff a £1,000 payment in order to help support them through the cost-of-living crisis.
The digital challenger bank will make the payment to staff members earning less than £40,000, although it is unclear how many of the company's 2,500 staff fall under this threshold.
TS Anil, Monzo’s Global CEO, said on LinkedIn News UK that the firm was “constantly reviewing the situation to make sure that we’re doing what we can.”
Are one-off bonuses the best solution to combat the cost-of-living crisis?
Monzo joins a growing list of firms stepping up financial support for their workers amid the ongoing cost-of-living crisis.
Many major firms, including supermarkets Asda, Tesco and Morrisons are among the firms to have upped pay in recent weeks, partly in a bid to keep hold of staff who might otherwise be lured to competitors offering higher wages.
And in July, Barclays announced it would be giving its 35,000 UK staff a £1,200 pay rise from August 1, 2022 in response to the economic downturn.
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However, some firms' attempts to help their staff with growing costs have not been successful.
Unionised workers at engine maker Rolls-Royce recently rejected an offer which would have seen staff receive a one-off £2,000 bonus. Bosses at Unite the union said the move fell "far short of the real cost of living challenges which our members are experiencing".
The John Lewis Partnership also recently announced that it would be offering employees free meals over the winter months, partly as a way to help them keep household costs down.
But Kate Bell, the Head of Economics at the Trade Union Congress (TUC), said one-off gestures such as (temporarily) free food don’t go far enough.
“Of course workers will take any form of help they can get this winter,” Bell said. “But the only real way to give working families security is a decent pay rise. One-off support is not enough. We need to get wages rising across the economy to end this living standards crisis.”
However, the TUC call for wage rises is not being heeded by many firms, and this is an issue that could lead many employees to look elsewhere for new jobs.
In fact, new research from recruitment agency Aspire reveals that 45% of workers have been waiting more than 12 months for a pay rise, as inflation hits 10.1%.
Additionally, a recent study from the Chartered Management Institute (CMI) found that 48% of UK firms had no immediate plans to offer salary raises.
What are some alternatives to bonuses or pay rises?
Even if pay rises are a viable option for some firms, it is worth HR’s time to consider other financial wellbeing options. In fact, research published in 2022 from global life insurance provider MetLife found that one in two employees would sacrifice more of their basic salary to get a personalised employee benefits package.
The research was conducted as part of MetLife’s Re:Me report, which looks at how the pandemic has shifted attitudes in the workplace. Among its findings was the discovery that 69% of employers said they’d work harder for an employer who provided benefits that were tailored to their individual needs.
And they’re not looking for 'soft' perks like gym membership or employee discounts (many of which, in any case, became obsolete during lockdown and the peak of the pandemic). Income protection was the 13th most desired benefit prior to the pandemic; MetLife’s research discovered that it now stands at 3rd, with a further 58% of employees stating that they’d like their benefits package to cover all their dependents, including their spouse.
There are also other steps that employers can take to help employees make their money go further. Below, Towergate Health & Protection suggested:
Offering a salary sacrifice scheme enables employees to maximise their pre-tax income. Employees can pay a comparatively reduced price on things like childcare costs, commuting to and from work, and even their pension. If an employee is close to the higher rate income tax band, a voluntary increase in their monthly pension contribution could help them to stay within the 20% basic rate tax band.
Expert guidance is often more easily, and freely, available than people realise. In fact, it may already be provided as a cost-free add-on to other health and wellbeing support. Employee assistance programmes (EAPs) often form part of the offering within other employee benefits, such as group risk benefits, and can provide confidential advice to employees on a number of concerns, including money worries.
Employee discount schemes can help employees’ money to go further. Cashback cards can be made available for everything from the weekly grocery shop to clothes, DIY items, and days out. These come at a variety of costs, depending on the offer, or are sometimes even free to encourage store loyalty. Some employee discount schemes also provide access to a free credit-checking service, and money advice lines, to help employees to keep on top of their finances.