With thanks to our volunteer Yasmin Abid for her support in producing this blog
Financial wellbeing has been described as “the last workplace taboo”. Research from the Social Market Foundation (SMF), Barclays and the Work Foundation shows employers need to address financial wellbeing, both to support the general welfare of their employees – and to tackle the UK’s low productivity levels.
What’s the problem?
Financial instability is a significant cause of stress in the workplace. According to data from the SMF, one in twelve workers has financial difficulties, while nearly a quarter are just managing. Money worries are detrimental to general wellbeing: research from Citizens Advice found that 79% of people with debt worries lose sleep most nights, while 74% said it was affecting their mental health. This is bad for the individual, but also bad for their employer: stressed staff suffer from reduced concentration and more frequent absences from work.
The effect of financial wellbeing on productivity levels
The UK is significantly less productive than the major economies that we compete with. A number of factors contribute to this productivity puzzle, including the wellbeing of staff: experimental trials have shown that happiness increases productivity by 12%. Since financial instability is a significant component of wellbeing, employers can boost productivity by supporting their staff to manage their finances.
What has been done so far- and what remains to be done
Some employers have started to recognise this. For example, Anglia Water combined a number of initiatives including a loyalty savings scheme, a financial education programme and on-site banking services. However, such programmes continue to be few and far between: in 2009, only 23% of businesses offered financial guidance to employees.
Larger employers can consider initiatives such as extending auto-enrolment policies to include short-term savings or income protection insurance as well as pension savings, or set up financial mutuals providing affordable savings and credit products. But even smaller employers can take steps to support the financial resilience of their staff, for instance by printing monthly savings goals on payslips or offering budgeting support alongside the payroll.
Without such support from their employers, individual wellbeing – and productivity – will continue to suffer.