As inflation and the cost of living continues to surge, employees are increasingly relying on company benefits to cover part of their living costs.
That's according to new data collected by Juno, a flexible benefits platform that lets employees choose perks from fitness classes and produce boxes to cleaning services.
Between December 2021 and May 2022, there was a 56% increase in the number of employees at VC-backed companies using the Juno platform opting to spend their employee benefits allowance on essential items such as food and groceries, household bills, utilities and childcare. The sample size was 3,000 employees.
Given the choice, staff will select things that make a tangible and immediate difference to their everyday lives
"Most people are feeling the bite of rising living costs. At Juno, we’re seeing early evidence of this in how users’ choices have shifted over the last six months. Given the choice, staff will select things that make a tangible and immediate difference to their everyday lives,” says Ally Fekaiki, founder of Juno.
While what is considered essential will differ from person to person, employer benefits can “help shore up the provision of things which staff value” when they’re being more financially cautious, he adds.
Startups stepping in to help with the cost of living
Good benefits provision shouldn’t be seen as a “substitute for a decent salary that keeps pace with market rates and inflation,” says Fekaiki. But many companies are simply “not in the position” to bump salaries constantly and most carry out salary adjustments once or twice a year.
Some also cannot afford to adjust salaries “when runway is shrinking” amid the market downturn, says Matt de la Hey, CEO at inploi, a recruitment software startup. Many European startups have recently announced layoffs. But there are other ways startups can support employees with rising living costs.
One strategy, de la Hey says, is to introduce “enhanced commission structures to help drive growth and share success with employees”.
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Inploi, for example, has introduced a "team commission pot", where a proportion of every sale and customer renewal goes to a fund shared by everyone (not just the sales team) as a thank you to the team for delivering great results.
“More flexible working options can also help, allowing employees to save on commute costs and even relocate to places where the cost of living may be lower,” adds de la Hey.
Other startups are stepping in to help alleviate the costs of food and energy.
Berlin-based insuretech WeFox — which scooped up $400m in equity and debt funding this month — offers its employees who partly work from home a monthly allowance of €50 to help them meet additional energy costs — much needed, as European electricity prices reached the highest level on record this month.
It's also implemented tax-free benefits in the form of food vouchers and plans to subsidise employees’ breakfasts and lunches in Q4 this year.
Juno is launching a cost of living allowance tool which will enable companies to allocate employees an additional budget to help with their day-to-day living costs.
More regular check-ins and being especially attuned to warning signs that a team member may be struggling is important too
De la Hey says that startups need to show they are taking at least some action to help employees during hard economic times if they want to attract and retain talent.
While many startups are facing additional challenges — with funding tightening and businesses slimming down their budgets — competition for talent remains “extremely fierce”.
Less tangible ways of helping, he says, is being “especially mindful of employee wellbeing".
“More regular check-ins and being especially attuned to warning signs that a team member may be struggling, with provision for whatever additional support they may need is really important too,” he adds.
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Miriam Partington is Sifted’s DACH correspondent. She also covers future of work, coauthors Sifted’s Startup Life newsletter and tweets from @mparts_
Correction: An earlier version of this piece stated that 56% of startup employees using the Juno platform were using their benefits to pay for essential items. There was a 56% increase in the number of employees using their benefits to pay for essential items. The article has been changed to reflect that.