James Berry, CEO, explores effects of the cost of living crisis on the workforce and how employers can help.
The effects of the cost of living crisis continue to leave millions of UK households worried about their current and future financial situations. In fact, a report by the FCA found that just over 1 in 2 UK adults – the equivalent of 28.4 million people – were more anxious or stressed as a result of the economy.
This is little surprise when inflation continues at a high rate and mortgage interest rates are higher than they have been for a generation. Pressure is building for many, with the FCA report also finding that the number of adults who missed bills or credit card payments in three or more of the previous six months went up by 1.4 million: from 4.2 million (8%) in May 2022 to 5.6 million (11%) in January 2023.
Money worries don’t just affect people financially. These stresses can also have a huge effect on people’s physical and mental health - an issue that has been widely reported in British workplaces.
In this article, we will explore the current situation and what employers can do to improve the financial wellbeing of their employees.
Financial worries in the workplace
Research by Evelyn Partners, which surveyed 500 businesses, discovered that 30% of employers believed financial wellbeing amid the cost of living crisis was the biggest concern of their employees. Work/life balance (29%) and mental health (27%) were also considered major concerns for workers. As financial strain can lead to mental health issues like anxiety and depression, more and more businesses across the UK are witnessing employee absenteeism due to stress.
And with 72% of UK workers having been forced to change their lifestyles due to the rising cost of living, businesses should not be surprised by this impact – though they should be concerned. The mental wellbeing of workers is not just a personal issue, but something that will affect businesses if they do not support their employees through these struggles.
A workplace where employees can access affordable solutions easily, and an environment where they feel supported by their employers, can help to reduce stress levels outside of the home.
How can employers help?
Though 68% of UK workers hide their financially-driven mental health concerns from their employers, there are still ways that businesses can be proactive in supporting their workforce during this time. Ultimately, it is not necessarily for workers to speak publicly about their private financial concerns. Instead, employers would be wise to assume that almost all employees are feeling the effects of the cost of living crisis and to put in place measures across the whole workforce that can help to support their employees.
A survey of 1,333 UK workers found that most employers have failed to support those with lower incomes during the cost of living crisis. And as a result, 44% of employees would leave their current jobs to work for an employer that provides better financial wellbeing support. So it is in the interest of businesses to step up and help their workers to improve workplace satisfaction.
And with 40% of offices having introduced cost of living support, it shows that the tide is already beginning to turn, leaving those employers who haven’t yet introduced a full package of support potentially at risk of increased staff turnover.
Employers can adopt policies such as wellness programmes, education on budgeting and offering a payroll advance to ease the burden for employees. This can even extend to increasing salaries in line with inflation and providing payroll-linked savings and loan schemes to make savings and repayments simpler.
What we're doing to support workers
Here at Great Western Credit Union, our Money@Work scheme helps to support 42,000 people across 38 organisations to access ethical savings and affordable loans directly through their payroll. Through national research as well as feedback from our members, we know that payroll-linked lending or saving makes a big impact on an individual’s financial resilience and wellbeing – which is never more needed in these difficult times.
The scheme also provides resources and information to help staff to develop other good money habits, helping them to avoid cycles of debt. Because of our regional focus, cooperative structure and not-for-profit, ethical values, these activities also help people and businesses in the region to survive and thrive amidst a very tough economic climate.
Our Money@Work scheme is also a major focus of our current Bond Offer raise, which aims to help make purpose-driven finance more accessible across the UK. With just under a month left, we’re looking at reaching closer to our overall stretch target of £2m, inclusive of continued Fair4All Finance pound-for-pound match funding.
To learn more about our services for employers, email and one of our support teams will be available to help.