Only 3 per cent would tell managers about financial worries; experts highlight negative impact of debt on wellbeing and performance

Almost half (48 per cent) of UK workers are having to borrow money to meet their day-to-day financial needs, according to a nationwide study of financial wellbeing.

In the research by Neyber one in three workers (33 per cent) also listed financial concerns as their biggest worry.

However, the findings showed a divergence between employer and employee outlook in providing financial support and provision. While more than half (56 per cent) of businesses ranked themselves highly in offering financial assistance, two-fifths (39 per cent) of workers said their employer fails to communicate anything to do with financial support.

And while 24 per cent of employers thought their employees would seek managerial support if they were worried about money, only 3 per cent of employees said they would approach an employer with financial troubles.

“There is a big difference between having access to financial advice and guidance at work, and having to talk with your HR department or line manager about being heavily in debt and up to your neck in loans,” said Charles Cotton, performance and reward adviser at the CIPD.

Research published by the CIPD earlier this year also suggested that most employees would not be comfortable approaching HR or a manager with their money troubles.

“The vast majority of employees aren’t going to want to tell their employers the ins and outs of their personal finance details, and won’t be willing to share the fact that they are worried about multiple debts, for fear it would affect their employment status,” Jeanette Makings, head of financial education at Close Brothers, told People Management.

“This might then stop them utilising an employee assistance programme because they fear it being reported back to an employer, so it’s important that communication mechanisms stress that ‘this is anonymous, it’s confidential, we want you to use the help and the information won’t be passed back’.”

Findings published by Neyber also suggested that an increase in zero-hours contracts has left a quarter of UK workers with an income that fluctuates by more than 10 per cent each month, increasing to 45 per cent for those aged 18 to 24.

“Some sectors will be more impacted by non-consistent pay than others; particularly in areas like retail where people have a low base and high commissions, workers who move from contract to contract and seasonal hire work – but this can also affect self-employed people such as barristers and consultants, who sometimes have inconsistent workflow,”  said Makings. “It’s stressful living from day-to-day without a consistent income and, with consistent liabilities such as utility and food costs, if your income is fluctuating that can result in cash flow problems.”

The Neyber report warned that individual financial concerns have wider-reaching consequences for UK businesses, with employers reporting that poor financial wellbeing affects employee behaviour, job performance and relationships at work, damaging overall productivity.

“Employers are seeing the effects on their employees, with 40 per cent believing financial concerns are causing employee stress and nearly one quarter believing their employees are losing sleep because of money worries,” said Heidi Allan, head of insights and engagement at Neyber. “A lack of longer-term financial resilience built into UK households, along with fluctuating earnings, leaves a large portion of the UK population poorly prepared for the future.”

The report’s release coincided with the latest labour market figures from the Office for National Statistics, which showed that wage growth has lagged behind inflation for the first time since mid-2014. In the three months to March, average weekly earnings excluding bonuses increased by 2.1 per cent, while inflation rose by 2.3 per cent in the year to March 2017.

Meanwhile, a CIPD Labour Market Outlook survey released earlier this month revealed that employers’ pay rise expectations are at their lowest point since 2013, with wages expected to rise by just 1 per cent in the coming year.

Recently, Bank of England governor Mark Carney warned that rising inflation and economic insecurity over Brexit would lead to “a more challenging time for British households”.

With possible challenging financial times ahead, Cotton stressed that employers must take practical steps to support their workforces and guard against decreasing productivity. “It’s important for HR to raise awareness among their managers that financial wellbeing impacts on everyone irrespective of how much they’re earning,” he said. “Taking steps now to address security and financial provision in the workplace will ultimately benefit everyone.”

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