Research* undertaken by national intermediary Partners& last week highlights growing concerns about the financial wellbeing of employees as the cost-of-living crisis continues
A survey of more than 160 senior Human Resources (HR), Finance, Payroll, and C-suite professionals last week highlights how challenging the next few months may be for many employees, and by extension their employers also.
The research found that 9 in every 10 employers expected either a small (38%) or significant (52%) increase in the number of their employees experiencing financial difficulties this winter. The same survey also revealed that almost two thirds (65%) of organisations are already aware of employees struggling financially.
Steve Herbert, Wellbeing and Benefits Director at Partners&, commented:
“Despite the government’s announcement of significant support for household energy costs last week – which should keep most household energy bills at around their current levels – it is clear that millions of working people are already struggling financially. Indeed, it is likely that single-income households earning the National Minimum Wage, National Living Wage, or even the voluntary Real Living Wage may already fall within the widely accepted definition of fuel poverty.
Fuel poverty is only part of the picture though. Inflation on everyday essentials is also very high and currently sits at almost five times the Bank of England target rate of 2%, with increasing interest rates also squeezing household budgets ever tighter. This is primarily a problem for employees and their families, but it is also worth remembering that financially stressed employees are likely to be distracted and working at less than their maximum productivity. So by extension this is also a problem for employers too.”
As widely reported in the national media, many organisations are seeking to help their workers with “one off” cost-of-living payments, and the Partners& research revealed that a third of employers have already made (11%), agreed to make (3%) or considering making (19%) such a payment to support their workers through the crisis. Yet some employers are just not in a position to make such an expensive gesture, with 1 in 4 (25%) indicating that their employer could not currently afford to make a support payment.
“Whilst the appeal of a one-off payment is obvious, the reality is that the inflation crisis might persist not just through this winter – but perhaps as far as the middle of the decade. This raises the spectre of these apparent “one-off” payments having to be repeated – perhaps several times – and I do wonder how many organisations are financially robust enough to sustain such an approach, particularly if the Bank of England predictions of a year-long recession prove to be correct? Partners& would therefore encourage employers to build a package of measures that also includes other elements to secure financial wellbeing for employees.”
Partners& – in conjunction with their ecosystem financial-advice partners Integrity365 – are launching a range of Financial Wellbeing tools in October 2022, with a planned package of additional tools available from early 2023. These services will aim to equip employees with tangible and useful discount options on everyday spending, as well as providing the basic knowledge and understanding to enable sensible and pragmatic financial decisions against the backdrop of the cost-of-living crisis.
Partners& research suggests that around a quarter (25%) of employers already offer some financial education services, with around 3 in 10 (31%) actively considering the introduction of such services in the autumn of 2022.
“Most employees in the UK have never benefited from any formal education around money matters, and it is also the case that very few workers are old enough to remember the last time inflation was at the levels being seen today. It follows that most UK employees have no practical experience as to how to respond to this particular set of economic challenges.
So, some basic – but informative – sessions around money management can only be beneficial, and we will therefore be launching our “Four steps to financial health” offering in October. Partners& would encourage many more employers to embrace this approach as part of their employee support measures in the difficult months and perhaps years ahead.”