The Salary Calculator

The cost of living crisis: Working from home versus at the office

by Madaline Dunn

The working from home revolution has brought many people flexibility, more job satisfaction and savings; however, as the cost of living crisis bites, some are starting to weigh up whether it’s still a better option than in-office working. As the winter months draw nearer, some think that returning to the office might help them save money.

At The Salary Calculator, we’ll explore:

• The current cost of living crisis and employment trends,
• The cost of working from home,
• Whether working from the office can save you money.

Cost of living hike and employment trends

According to figures from the ONS, around 40% of adults in Britain now work in a hybrid working model, with 30% of the UK workforce working from home at least once a week – 8% of workers didn’t even step foot in the office for the entirety of 2021. Research from last year also found that around 70% believed that workers would never return to the office in the same way ever again, with the majority expressing a preference to work from home either full-time or “at least some of the time.”

However, this was before the cost of living crisis had taken a turn for the worst. Now, around 89% of adults (46 million people) report that their cost of living is continuing to increase. While almost everything is on the rise, with Citi investment bank warning that inflation could exceed 18% in January, rising heating costs are for may their primary concern. It’s not surprising considering that the energy price cap was due to reach £3,549 a year in October. However, the new Energy Price Guarantee means that a household with average usage will pay £2,500. This means that the 80% rise in energy bills that was due to come into effect on 1 October will be avoided, but many will still be faced with bills they can’t afford.

As Paul Johnson, director of the Institute of Fiscal Studies (IFS), says, the energy freeze is “very poorly targeted” and one that will benefit “better-off people.” This was echoed by Torsten Bell, the Resolution Foundation’s chief executive, who said, despite the support being “big” and “bold,” families should still expect a “tough winter ahead, with rich households getting twice as much cost-of-living support as poorer households next year.”

Experts forecast that without the government intervening, the number of UK households in fuel poverty could reach 12 million by January, with The End Fuel Poverty Coalition highlighting that 42% of households will be unable to afford adequate heat and power from January. The situation is so dire that the head of the World Energy Council (WEC) has said that the UK will have to begin to develop a spirit of “radical generosity” in order to prevent the loss of lives.

With energy becoming so expensive, it appears that the trend of working from home may phase out. So let’s break it down – which option is cheaper?

The cost of working from home

According to Uswitch, by winter, those working from home, rather than the office five days a week, will use around 75% more gas each day and 25% more electricity. Analysis from New Statesman’s business editor Will Dunn also found that poorly insulated homes in the UK could cost over £30 a day to run. Considering that a study conducted by EDF in partnership with property data platform, Sprift, found that only 58% of the 21 million homes across England and Wales studied meet insulation standards of 1976 or earlier, many people will find themselves paying more.

Specifically, research shows that from 1 October, a large 32kW boiler will cost £4.80 an hour to heat, boiling a kettle will cost 10p, and running a desktop PC and monitor will add £1.25 a day at the new rate of 52p per kilowatt hour. However, on the childcare front, while not always ideal, working from home can mean that you pay less in childcare costs.

Speaking about this, Uswitch energy spokesman Ben Gallizzi said: “Using extra energy when the heating would usually be off will be especially noticeable on bills this year with prices rising by 80%.” Adding: “Not only do people working from home use more energy staying warm, they are also cooking lunch and making cups of tea, as well as running computers, TVs and phone chargers.”

Can working from the office save you money?

Many of those working from home are beginning to feel the pinch, and research from MoneySupermarket.com shows that now around 14% plan to head to the office more often to help save on energy bills. Interestingly, this figure rises to 23% for those aged 18-24 years old.

That said while returning to the office means you’re likely to save on energy bills, it will cost you in other respects. Working from the office means travelling in, and transport costs are currently also pretty high. 

If one travels by car, factoring in Confused.com’s estimate that the average daily commute equates to 5,040 miles a year, and NimbleFins estimation that the real total cost per mile of driving is roughly 47p, this means annual commuting costs will reach around £2,370.

If you don’t drive, travelling by train can be equally, if not more expensive than driving. New rail fares mean that the current price of the typical annual rail season ticket is £3,263, which is due to rise further by £433 next year. Meanwhile, The Times reported that a return journey from Reading to London would see commuters pay £4,860 for an annual season ticket, which is also £93 a week. The paper made a point to outline that this doesn’t factor in additional costs, for example, buses, Ubers and taxis from the station to your place of work. A monthly Oyster Travelcard for TfL services, for example, costs between £147.50 to £270 per month.

For parents considering returning to the office, it’s also important to take into consideration childcare costs. Childcare can be expensive, with research from the Coram Family and Childcare charity finding that the average price for children under two in a part-time nursery sets parents back around £138.70 a week. Money Helper reveals similar figures, with a full week of childcare costing £263.81 a week, which, over 39 weeks, reaches £10,289.

Final thoughts

With so many variables to factor in, the best way to determine what will be best for you and your finances is to review your bank statements and reflect on where you can make savings. If you’re able to travel to work via a less expensive medium of transport, pack your own lunches, and, if you have children, find suitable and affordable childcare, returning to the office might work in your favour.

However, if you live a significant distance away from your workplace’s office and would have to use public transport for travel, it might be best to continue as you are. Moreover, there are some hints and tips that can help you save energy when working from home, for example:

• Turning your appliances off at the mains can save you £55 a year,
• Ensuring you turn off the lights in rooms you’re not using can save you £20 a year,
• Switching to energy-saving light bulbs can save you £13 per bulb per year,
• Turning your thermostat down by just 1 degree can save you £150 a year,
• Only filling the kettle with what you need can save you £36 a year,
• Covering your pans with lids means your food will cook quicker, and you’ll use less energy – likewise, if you’ve got electric hobs, make sure to keep them clean; dirt and grease will make them less energy efficient.

While these savings may seem small in the grand scheme of things, they will all add up and leave you with more money than you expected while exerting minimal effort.

Tags: cost of living, Economy, Jobs, Working from home

How the cost of living crisis is affecting the job landscape

by Madaline Dunn

The ongoing cost of living crisis appears to be an endless one. Living standards face their largest fall since the mid-1950s. Millions are being faced with dire financial situations and around 1.3 million are confronted by “absolute poverty.” As the situation worsens, many are desperately searching for a solution, and some are looking toward switching jobs as the answer. 

That said, some experts are warning that the grass is always greener on the other side, and that while workers may be lured in by higher-paying salaries, switching now might hurt them in the long run. 

At the Salary Calculator, we’ll explore:

• How the cost of living crisis is affecting jobs
• How switching jobs may benefit you
• What to watch out for when thinking of exploring a new position

Cost of living crisis encourages job switches

Research conducted by Totaljobs has found that more and more people are looking for new job opportunities to help support them through their financial woes caused by the cost of living crisis. The UK job found that workers’ salaries are increasingly squeezed, and 47% are now living from payslip to payslip. 

Despite the ongoing financial challenge faced by many, nearly half (48%) have not received a pay rise, and those who did (42%) saw a rise that failed to meet the current rate of inflation. This has pushed 17% of workers to take on another job to supplement their income; meanwhile, 30% are taking on additional shifts. If you are one of the people thinking about taking on a second job, at The Salary Calculator, we can help you calculate your total take-home, just head over here.

For many, though, the crisis is pushing them to look further afield. Now, nearly 40% (37%) are looking to change lanes and find a new job. Those who were classified as essential workers were twice as likely to have to leave their jobs and move into a new sector due to higher wages. 

Commenting on the figures, Jon Wilson, CEO of Totaljobs, said that key workers were those who suffered most, despite the fact society “couldn’t have functioned without them” during the course of the pandemic. “This research illustrates that everyone is feeling the pinch of the rising cost of living – yet it is disproportionately felt by our key workers – to the extent that some are looking to move jobs for one that provides them with more financial security.”

Research from PricewaterhouseCoopers (PwC) has also uncovered that nearly one in five employees intends to leave their current jobs and find a new role within the next year. A further 16 per cent plan to leave the workforce on a temporary or permanent basis. Similarly to Totaljobs, the research, which considered responses from over 2,000 people in the UK, found that the main motivation for switching job roles was pay (72%).

The benefits of making the change 

Research from the Office for National Statistics (ONS) last year, revealed that those who switched jobs saw a pay increase of 6.6%. That said, the figures show that the size of the rise was dependent on sector and experience. 

Pay growth for those in the arts, entertainment and recreation sectors hit 21%, meanwhile, for those working in information and communications, the increase was one percent lower (20%). While employees working in these sectors saw significant salary growth, the research showed that the increase was even higher for those who moved to a new industry; overall median earnings growth in this scenario stood at 2.1 percentage points higher. 

For those with more years of experience within their sector, the benefits of a switch were also greater, with average earning growth in this bracket at just over 16%.

If you’re considering switching jobs, head over to this page to compare your current salary with the salary offered by a potential new job.

What do the experts say?

While there are certainly financial benefits to be had from a job switch, it’s important to note that it’s not all sunshine and roses. Some experts have said that switching jobs for financial reasons may mean less stability, and a loss of statutory rights. From a broader perspective, some have also noted that switching jobs regularly might make it more difficult to keep track of one’s pensions and ensure one is keeping up with one’s levels of pension contributions. 

Sarah Coles, a senior personal finance analyst at Hargreaves Lansdown, outlines: “The grass is slightly greener on the other side of the fence, but the ground may be less stable.” Adding: “Switching jobs will boost your pay by an average of 6.6%, and switching industries, occupations or regions at the same time can have an even more dramatic effect. But before you jump the fence, you need to know what you’re giving up.”

Discussing the impact of switching jobs on pensions, Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, comments: “You may have a job where pension contributions are above the auto-enrolment minimum, say 12%. If you then left that job the next role might only come with an 8% contribution, and if you don’t take action to increase your contribution back up to this level, then you will likely see a significant shortfall by the time you hit retirement. As we move jobs more often care needs to be taken that contribution levels are maintained wherever possible.”

Morrisey continues: “In addition, regular job moves increase the likelihood that you will lose track of pensions from previous employers. You may misplace paperwork or stop receiving documents because you moved house and didn’t update your details, or your provider might change name making it harder to track down.”

Tags: 2022, cost of living crisis, Jobs, Pensions

What is the ‘Way to Work’ initiative, and how will it affect you?

by Madaline Dunn

At the end of January, the Department for Work and Pensions published its new plan to move “half a million people into jobs by the end of June.” The campaign is called ‘Way to Work’ and supposedly will “support people” back into work “faster than ever before.”

However, as positive as this sounds, the reality of the initiative is very different. Critics of the new campaign have called it “dangerous” and say that it “misses the point.”

So what exactly is the campaign all about and who will be affected by it? At The Salary Calculator, we’ll walk you through:

• What the ‘Way to Work’ initiative is
• Why the government has introduced it
• What the impact of the scheme will be

What is the ‘Way to Work’ initiative 

The Way to Work initiative focuses largely on Universal Credit (UC) claimants who are looking for jobs and will be facilitated at UK Jobcentres by claimants’ Work Coaches. The initiative will see the introduction of new rules whereby claimants will have to expand their job search and apply for job vacancies outside of their preference zone at four weeks of unemployment. Currently, the period at which claimants must expand their search is three months. 

As outlined by Thérèse Coffey, the Work and Pensions Secretary, the drive behind the initiative is to get people into “any job,” rather than a job that fits their skills set, qualifications, or interests. 

Now, under the new initiative, Universal Credit claimants will face tough sanctions if, after four weeks, it is deemed they have failed to make “reasonable efforts” to secure a job or if they turn down any offer. Claimants will ultimately lose part of their universal credit payment.

The amount of Universal Credit benefit claimants receive varies depending on their personal circumstances, but already, the TUC has outlined that it’s not enough to live on, especially in light of rising energy costs and the soaring costs of living. 

Why has the government introduced this initiative?

According to the government, the initiative is a response to the number of job vacancies in the UK, which is now at a ‘record high’ at 1.2 million vacancies, a figure that’s 59% higher than pre-pandemic levels.

Speaking about the motivation behind the initiative, Coffey said: “As we emerge from COVID, we are going to tackle supply challenges and support the continued economic recovery by getting people into work. Our new approach will help claimants get quickly back into the world of work while helping ensure employers get the people they and the economy needs.” 

What will the impact be of the scheme?

Although the UK government argues that this initiative will help to fill vacancies and kickstart the economy, experts argue that the move is doomed to fail, and that coercion into jobs has been proven not to work. Regardless, with over 200,000 new claims per month, many people across the UK will find themselves impacted by this initiative. 

Elizabeth Taylor, CEO of the Employability Services Related Association (ERSA), outlined that a “one-size-fits-all” approach is ineffective, and the initiative, as a whole, is “at odds with the people centered methodologies that employment support providers apply.” Adding: “Individually tailored support which meets personal and local labor market needs must remain front and center of any quality employability provision.”

Taylor, writing in Forbes, says that rather than coercing individuals into jobs they aren’t suited to, providing “quality employment support” and finding ways to get people into the “right job” is not only better for the employer and the employee, but the economy as a whole, too. 

Likewise, Ruth Patrick, a senior lecturer in social policy at the University of York, states that pushing people to apply to any job, “underpinned” by the threat of benefit sanctions, is, in fact, damaging and “corrosive” to relationships between claimants and advisers. Patrick explains that this approach risks pushing people into “insecure and unsuitable employment.”

A review by a University of Glasgow team also found that overall, the kind of sanctions proposed by the UK government has detrimental effects on health and wellbeing, leading to material hardship, unemployment and economic inactivity. Moreover, while in the short term, sanctions can boost employment levels, job quality and stability are negatively affected in the long term. 

According to a statement by the Minister for Employment, Mims Davies MP last week, there are now “positive signs of recovery,” with unemployment “continuing to drop,” however, for the time being, it looks as though the tough sanctions of the new Way to Work initiative are here to stay.

Tags: Economy, Jobs, unemployment, Universal credit

The great resignation: What is it and what does it mean for you?

by Madaline Dunn

The great resignation is the hot topic on everyone’s lips, with millions either leaving behind their old roles, or looking to in the near future. Much like the pandemic, it was unprecedented but bound to happen eventually.

This movement of people leaving their jobs en masse includes individuals from every demographic, too, reflecting a widespread frustration with traditional work and labour models.

At The Salary Calculator, we’ll walk you through:

• What the great resignation is
• What’s driving the great resignation
• The pros and cons of the great resignation
• How it will affect you and your work

What is the great resignation?

The great resignation, a term coined by business and management professor Dr Anthony Klotz in May 2021, refers to the current mass exodus from the workforce.

A study by recruitment firm Randstad UK recently conducted a survey of 6,000 workers and found that 24% of those polled were planning a job change within the next three to six months, 69% of which felt confident about their decision. Meanwhile, 16% felt anxious or concerned about finding a new role.

Employment Hero found that young people aged between 25 and 34 are those most looking towards a change, with a whopping 77% actively looking to leave their jobs within the next year. 74% of those aged 18-24 expressed similar sentiments. These were also the demographics that reported the most’ burn-out.’ Moreover, data published in i, showed one-third of millennials will seek out new employment if forced to return to the office full-time after the pandemic.

That said, those in more senior positions have also joined the great resignation. Executive outplacement firm Challenger, Gray & Christmas, found that in December, 106 CEOs said goodbye to their senior roles, and in the final quarter of 2021, this was up 16% on a year-over-year basis

It comes as no surprise then, that in the UK in July, job vacancies were at an all-time high, crossing the threshold of one million for the first time.

What’s driving the great resignation?

The great resignation has a number of different causes. One aspect is that following nationwide government-sanctioned lockdowns; remote working became the norm for many people. This life readjustment gave people time for reflection, and when compared with office work, many found they were able to spend less time commuting and more time with their family.

Remote working is also a good move for the wallet, with fewer expenses such as travel and eating out. Likewise, many are also quitting in search of better work opportunities and higher pay. There has also been a rise in the number of people deciding to be their own boss, and go self-employed.

It’s also important to note that certain industries are seeing more workers leave than others. Specifically, leisure and hospitality, retail and healthcare are the industries that have seen the biggest departures.

Should you join the great resignation?

Of course, when mulling over whether or not to leave your job, there are many factors to consider, and as with anything, there will be pros and cons.

Leaving your job and seeking out new employment or a different kind of employment can help you access greater flexibility, secure a more healthy work-life balance, and enjoy the benefits of a bigger salary. Likewise, those looking to leave their job may have come to the realisation that their work is no longer fulfilling or aligning with their values. As such, finding a company that shares similar guiding principles can mean much more job satisfaction.

That said, quitting one’s job is not necessarily an option for everyone. When thinking about quitting, it’s important to assess key questions such as:

• Am I in a financial situation to do so?
• Do I know what you want to do next?
• Do I require further training or education?
• Am I looking to join a new field?
• What are my family obligations?

How will the great resignation affect you?

The great resignation is very much a workers revolution, and many are arguing that employees are now in the driver’s seat. That said, it’s important to note that it’s still competitive out there, and in order to succeed, you need to be able to sell yourself, negotiate and network. Keeping your Linkedin fresh, making sure your resume is updated and conducting deep job searches will help you make the most of this opportunity.

However, not everyone is quite ready to jump ship just yet. For those who are comfortable in their position, you may have questions about how the great resignation will affect you at work. Well, a study recently conducted by the Society of Human Resource Management in the US found that out of those employees who decided to stay on when their co-workers left, 52% had taken on more responsibilities, and 30% found themselves struggling to get “necessary” work done. As a result, 55% are now questioning their salary, and whether it’s enough.

So, it’s fair to say that workers are feeling the knock-on effect of their co-workers joining the revolution. However, it’s not all doom and gloom for those who wish to stay in their current job, it’s important to be assertive if you’re struggling.

Speaking to The Guardian, Rahaf Harfoush, a digital anthropologist and the author of Hustle and Float, says in the aftermath of coworkers leaving, you should: “Look at your original role,” and assess how much you’ve taken on, then spell it out: “Here’s what I was hired to do; here’s how my time is allocated now. So either we need to reprioritise or we need to reallocate.”

Moreover, during this time, negotiating power is in the hands of employees, so it could be the right time to ask for a pay rise or a loyalty bonus.

 

Tags: Employed and Self Employed, Finances, Jobs, self employed, The great resignation

Social care tax proposed from April 2022

by Admin

The government announced yesterday plans to introduce new social care tax, intended to help reduce the costs incurred when a person goes into care. If the bill passes parliament, this will mean be an increase in National Insurance contributions of 1.25 percentage points from April 2022, to be replaced by a separate tax of the same amount from April 2023. The benefit of this additional tax, in England at least, is that care costs will be capped at £86,000 (less if you don’t have that much in savings / assets). Scotland, Wales and Northern Ireland set their own social care policies, but will receive additional revenue from the tax generated.

The plan has drawn criticism from many who see it is a tax paid by low- and middle-income employees to subsidise wealthy retirees. It also appears to be a break of a manifesto pledge not to raise income tax, National Insurance or VAT – the justification for which, put forward by the government, has been that the pandemic has changed things.

This BBC article has a clear summary of the changes in more detail, as well as a chart showing how much extra tax you’ll pay depending on how much you earn. The bill still needs to pass parliament, but when this and other changes from April 2022 are confirmed, The Salary Calculator will be updated with the latest rates so that you can see what a difference it will make to your take-home pay.

Tags: coronavirus, covid-19, HMRC, income tax, Jobs, national insurance, Pay As You Earn, social care, tax rates