Companies’ productivity and performance is at risk of dipping unless they do more to support their employees’ financial wellbeing amid the deepening cost-of-living crisis, which is highlighting to board level the importance of making sure workers feel secure and in control, despite their finances coming under increasing pressure.
The REBA/WEALTH at work Employee Financial Wellbeing Survey 2022 has found that employers cite rising energy prices as the number one risk to the financial wellbeing of their staff (91%), with other cost-of-living concerns, such as rising consumer inflation (81%), rising rent costs (63%), wages not being high enough to cover the cost of living (50%), and high household debt levels (49%) also factors.
In addition, given recent interest rate hikes, many will now also be concerned about mortgage costs as interest rates could head even higher.
Despite this, a sizeable majority of employers rate their ability to help employees build a financial safety net (63%) and manage debt (66%) as poor. Only 6% believe their organisation is very good at supporting budgeting and money management. All areas that are likely to become more prevalent because of the current cost of living crisis.
As the crisis deepens, boards have been forced to become more aware of the importance of financial wellbeing. This is highlighted in Aviva’s 2022 Working Lives report which finds that boards are more concerned about the soaring cost of living (35%) than staying ahead of competitors (25%) and the fallout of Brexit (17%) in term of priorities.
However, with only one in 20 employers having put a mature financial wellbeing strategy in place, the focus on financial wellbeing is in its infancy and lags behind other wellbeing pillars such as physical and mental health, despite all three being very closely linked.
Employers see enhancing the general good health of their staff (85%), creating equity and fairness (69%) and ensuring inclusivity across the entire workforce (68%) as the main reasons to offer financial wellbeing as a benefit. They know they must focus more on inclusivity with support for low earners (32%), and families and dependents (38%) among the key areas to introduce in the next two years while 41% plan to offer sustainable wellbeing products and services in this time.
Workplaces also recognise that poor financial literacy is a key financial wellbeing risk (59%), with almost half (47%) believing that it a challenge for improving financial wellbeing for the majority of the workforce. On a positive note, 70% say increasing financial capability is a priority in the next two years.
Jonathan Watts-Lay, Director, WEALTH at work, a leading financial wellbeing and retirement specialist, comments, “As the cost-of-living crisis deepens, many employers will want to help their employees, so it’s always worth speaking to them to see what support is available.”
He adds; “For example, this could include financial education and guidance through coaching to help employees understand their finances, including ways to save money, how to manage a budget, what to do if in debt, why it is so important not to opt-out of a workplace pension, and how workplace benefits can help.”
Watts-Lay explains; “It’s important to find out what workplace benefits you have and how they can help you save money. For example, this could include employee discount schemes (on transport deals, meals or tech purchases etc.), or salary sacrifice schemes (covering cars, bikes, gym memberships or mobile phones etc.).”
He adds; “For those struggling with their finances, there are many support services available including MoneyHelper’s budget planner and charities such as StepChange and National Debtline who can help people manage debt problems. Citizens Advice can also help people to work out what benefits or grants they may be eligible for. Proactive employers are actively working to remove the stigma of debt and encourage their employees to not suffer in silence and access the support available.”