Recent research* undertaken by Partners& finds that increased fuel poverty, rising mortgage costs, and continued high inflation will intensify financial challenges for employees and their employers next year.
A survey of 169 senior HR, Finance, and C-suite professionals – representing a combined workforce of almost 189,000 employees – confirms that 2023 looks set to be a financially gloomy one for employees.
The research was undertaken by risk management and insurance intermediary Partners& on 30 November 2022, and reveals that 9 in every 10 employers (90%) expect at least some of their workers to be in fuel poverty when the next increase in domestic fuel prices takes hold.
Steve Herbert, Wellbeing and Benefits Director at Partners&, explained:
“The Chancellor, Jeremy Hunt, has announced that the Energy Price Guarantee will increase from its current typical level of £2,500 per annum to £3,000 per annum from April 2023.
One widely accepted definition of fuel poverty is any household spending more than 10% of its income on energy usage. So, in simplified terms, any family earning less than £30,000 per annum in 2023 could soon fall into fuel poverty.
Our survey suggests that 59% of organisations employ at least some workers on salaries of less than £30,000, with a further 1 in 4 (24%) employers paying “most” of their workforce less than this level. A small number of respondents (7%) indicated that nearly all of their employees are earning less than £30,000.
But employee financial problems in 2023 don’t stop there. The same research by Partners& found that the growth in interest rates – and, in particular, its impact on debt and mortgage repayments – is now becoming a very real problem for workers too. Inflation and the cost-of-living crisis (31%) is however expected to remain the single biggest financial challenge for employees in 2023, yet almost two thirds (62%) of employers suggest that the combined impact of both soaring inflation and high interest rates pose the biggest issue for workers, and 6% now consider rising interest rates as the single biggest financial challenge for their employees and their household finances next year.
“The Bank of England’s base rate for borrowing has been at record lows for much of the last decade, and as a result house prices and mortgage borrowing have boomed during that period. With such high levels of debt even relatively small rate increases are causing real pain to many working families with mortgages, particularly as inflation and other household costs also remain high.”
Other survey findings show that almost all (97%) employers now expect the numbers of their employees experiencing financial difficulties to increase in 2023, and that more than two thirds of employers (67%) were actively aware of employees already struggling with their personal finances.
Partners& highlights that financially distracted or distressed employees are likely to be less engaged and productive than those without money worries, which makes this issue a genuine concern for employers seeking to navigate their way safely through the recession ahead.
“It’s clear that employers expect 2023 to be a financially challenging one for many or most of their employees. Some organisations remain financially strong, and these employers may be able to reward their workers with healthy – possibly even inflation matching – pay awards or one-off cost-of-living payments. Yet many others will struggle to make such payments during a potentially lengthy recession, and will need to find other ways to support their workers.
Partners& would strongly encourage all employers to offer financial wellbeing support to their workforce, to help employees better manage their finances throughout this difficult period and beyond.”
Please visit the Partners& website for our full range of Wellbeing and Employee Benefits services, and our Financial Wellbeing pages for details of the impact on financial stress on employees, and our services in this area.
*The Research was undertaken at the Partners& Employment Webinar on the 30th November 2022 amongst an audience of 169 senior Human Resources (HR), Finance, Payroll, and C-suite attendees representing a combined workforce of almost 189,000 employees. The employers represented in the survey arose from a range of Private, Public, and Third Sector employers.
Partners& is a Chartered insurance broker providing specialist insurance, employee benefits, risk management and claims advice to businesses and private clients. As a next generation insurance advisory business, Partners& combines the best traditions of broking, such as technical advice and client service, with modern thinking and intelligent use of technology, to enhance the client experience and create a dynamic workplace for its talented team. The company recently received two awards, Best Diversity & Inclusion Programme and Best UK Start Up at the 2021 UK Broker Awards. It has also been awarded its second gold Investor in Customers award demonstrating its commitment to delivering exceptional client experience.