With the highest rates of inflation in decades, and a collapse in the value of the pound, the UK is facing a cost-of-living crisis that will affect millions of working people across the UK.
The crisis has a disproportionate impact on low wage households who spend a larger proportion of their income on fuel and food. According to the Living Wage Foundation ‘Life on Low Pay’ report, there are currently an estimated 4.8 million workers earning a wage below the cost of living. 42% of such workers are reporting missing meals regularly due to financial reasons and 56% report using food banks regularly. During the winter months many of these workers are facing bleak choices such as whether to ‘heat or eat’.
Why is it important to address the cost-of-living crisis?
We understand that the cost-of-living crisis is having a huge impact on the mental health of workers, which is already estimated to have cost the UK private sector between £53-56bn in 2020-21. Workers under financial pressure are unlikely to perform at their best and businesses are likely to face reduced productivity, higher turnover and increased training costs.
The government has a primary role in ensuring that people are protected, and they have introduced measures in response to rising energy costs. While these measures (to cap energy prices to £2,500 for a typical household) will make a difference, it should be noted that this is double what the average household bill was in 2020.
Business and specifically the largest publicly listed employers can play an important role in shielding their lower paid workforce from the impacts of the cost-of-living crisis.
What are we doing?
For this reason, CCLA and the Church Investors Group have written to the largest publicly listed employers about their response and specifically asking them:
- Whether they have taken any steps to support their lowest paid employees through this winter or if they have any plans to be implemented over the next few weeks?
- What proportion of their workforce will be impacted by these activities and how were they selected for assistance?
- Whether third party contracted staff whose principal place of work is one of your premises (such as cleaners, caterers and security guards) are eligible for assistance through any ‘cost-of-living’ programme that they offer?
- If they have no plans, why they are not acting on this issue?
Our intention of this engagement is to encourage large employers to respond and to showcase how businesses are already addressing the challenges of the cost-of-living crisis.
What we have learned so far
We have received 58 responses from the 100 companies which received letters, of which six are ‘holding’ responses and 52 are substantive.
The companies that have replied collectively employ 3.5 million people and have a combined market capitalisation of £1.4 trillion. The responses are from companies across multiple sectors, from advertising to industrials and retail, and given the diversity of business models their responses have differed.
Since our outreach a 17-strong investor coalition with £3.2 trillion in assets under management have united to back the initiative and have signed a joint investor statement.
Summary of responses
What is next?
We will write again to the largest 100 companies in March 2023 to ask for an update and monitor progress.
In addition, we will be reflecting on the lessons learnt through this engagement in our voting during proxy season and we may vote against the election of the chair of the renumeration committee in businesses that have not responded to our letter and those where we think their response has been insufficient.