Wage inequality is shining a light on employers' duty of care for our financial security and well-being

Recent years have brought a growing debate and disquiet about income and wages growth and inequalities. Since the global financial crisis of 2008, average wages growth has flattened in most of the advanced economies and many economists are predicting little change in the foreseeable future with the low rates of inflation, increasing pressure on labour costs and the need for productivity growth. Together with the changing jobs economy with more people working in less secure or independent jobs, financial security and well-being is of increasing concern for growing numbers of people.

At the same time, as we move in to 2017, stock markets and growth in capital and profitability have continued a positive upward trajectory, but most of these benefits have accrued to the few and not the majority resulting in the growing clamour about inequality and executive pay ratios. These are big and important debates which we are engaging with, and it’s important as a profession we are playing our part in understanding and addressing these issues, and balancing the organisational and individual needs as well as our responsibilities to external stakeholders.

Within this context of low wages growth and less security, we recently published research that showed one in four workers in the UK suffer with money worries so substantial that it affects their ability to do their job. Most businesses no longer need convincing that they have a duty of care towards their employees’ health and well-being, and financial well-being should also be seen as part of this agenda. In November we joined employers across the UK in celebrating Financial Capability Week and raising awareness of the important role employers can play in helping their people feel more financially secure. Ensuring that people feel fairly rewarded for the work they do and supporting them in career progression to increase their earnings, is a good place to start. But employers should also consider the ways in which they can help people understand good financial management, saving for the future and managing their money wisely.

More broadly, the issues of the financial security of aging populations and in the UK, growing levels of household debt, and the successful roll-out of the Universal Credit system will depend on this understanding across the population.

Those employers who can afford it could also consider offering benefits like critical illness cover or death in service payments to help alleviate some money worries that inevitably come from big changes in circumstances, but communication and education could also be just as effective. It could be as simple as pointing staff in the right direction for independent advice and guidance – it needn’t cost much but could make a real difference to the individuals concerned.

We have been talking more and more about how we should drive our thinking from principles and a clear sense of purpose, and have the courage to challenge, to understand and use evidence and to think about outcomes. The principles of good work should encompass outcomes of fairness and well-being, and our duty of care to the people who work for us. These ideas are not entirely new – indeed the foundation of the CIPD over 100 years ago was as the Welfare Workers Association - but in today’s context have probably never been more important. Business needs to step up, but building a healthy society – in every sense of the word – also requires more focus in wider governmental and policy discussions.

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