Wednesday 11 January 2017
Source: CIPD Full report available here
With rising inflation likely to lead to pay squeezes, firms need to do more to help their employees cope with financial concerns
A quarter of people are suffering with money problems so substantial that it is affecting their ability to do their job, according to a new survey of more than 1,800 UK employees. The number reporting problems rises to a nearly a third (31%) among 18-24 year olds, and those living in London (32%).
The research, published by the CIPD and Close Brothers Asset Management, highlights why organisations need to be doing more to promote and actively support financial well-being, especially in a climate where pay will be squeezed as inflation rises.
The problem is not limited to low earners either, with one in five (20%) of employees earning £45,000 to £59,999 saying that financial anxiety has affected their ability to do their job. Meanwhile, women are more likely than men to report that money worries are affecting their work, with nearly three in ten (28%) women reporting the problem, compared with less than one in four (23%) men.
Charles Cotton, reward and performance adviser at the CIPD, the professional body for HR and people development, said: “This report shines a light on how financial well-being can impact not just employee health, but also workplace productivity. Money worries affect people regardless of their age, gender or level of pay, and with one in four admitting it negatively impacts their work, it’s clear that organisations should be focussing on financial well-being as part of their workplace agenda. This will become increasingly important over the next 18 months, as rising inflation is likely to lead to a pay squeeze and increased concerns about personal finances.
“Employers not only have a duty of care to their employees but will also see their bottom lines benefit if they invest time in developing a financial well-being strategy and play an active role in supporting staff in this area. Today’s businesses need to consider the impact financial worries are having on employee health, happiness and productivity and look at what they can do to help reduce stress levels.”
The report also focussed specifically on what could be done to improve financial well-being. While earning a higher wage was the top cited solution, a third of employees (32%) did not include this in their top five, demonstrating that boosting pay was not enough. Other solutions chosen included being rewarded in a fair and consistent manner (41%), being able to save for the future through a pension (26%), and being able to develop and progress in their career (20%).
Jeanette Makings, Head of Financial Education at Close Brothers Asset Management, commented: “Pensions changes, increasing life expectancy, uncertain economic times rising inflation and constant changes to the tax system mean that the financial landscape has never been more difficult to navigate. Money worries now weigh heavily on a huge number of employees across the country, impacting their performance in the workplace, so it is more important than ever that employers recognise the role they can play in helping staff to understand and improve their financial well-being. Equipping staff with the tools they need to take control of their finances now and for their future will not only improve their own well-being, it has been proven to boost productivity levels – benefiting both business and workers.”
The report also found that:
Charles Cotton added: “Financial well-being is a sensitive issue, and employers need to recognise that employees may be cautious about discussing their financial circumstances with their colleagues, but getting the system right will ultimately benefit everybody involved. Employers should create a well-rounded reward strategy that recognises this and can flex to meet the individual needs of each employee.”
Helen White, Head of Financial Capability for the Money Advice Service said: “There are many ways that people can make small changes to the way they manage their money that will help them get their finances back on track and free up some money for savings. Employers can help by directing their staff to jargon free information such as the Money Advice Service website and providing staff with the tools they need to make good decisions about their money.
“Where staff are experiencing problem debt they can use the Debt Advice Locator Tool to find free, impartial advice in their area, either online, over the phone or face to face.”
A panel event focusing on financial capability in the workplace took place during Financial Capability Week 2016. Aimed at employers and HR professionals the event focused on financial capability initiatives; what works, what is challenging and how to spread best practice. See below for a video transcript from the event:
