Financial inclusion – Is your employee’s financial health impacting on your business?Rosie MCARDLE
January is the month commonly associated with cutting back after overspending at Christmas and setting resolutions for the year ahead, be they financial or otherwise. Money worries are not necessarily limited to January though and employees financial concerns, may be one of the factors impacting on their performance at work. To illustrate this, in a survey conducted by the CIPD and Close Brothers entitled “Financial well-being: the employee view”, they found:
- One in four workers report money worries have affected their ability to do their job;
- One in ten say they have found it hard to concentrate/make decisions at work because of money worries; and
- One in ten workers report that physical fatigue caused by lost sleep worrying about money has impacted on their productivity.
The reality of the situation?
According to the money advice service 11.5 million people in the UK have less than £100 in savings and 1 in 4 UK households have no savings at all. That’s a lot of pressure for individuals to be carrying. Further, financial issues may also effect employees differently.
In respect of access to finance Hanadi Al-Sadi, social researcher at ‘Fair 4 All Finance’ stated in a recent article, “systemic failures have meant that financial exclusion disproportionately affects certain groups of people such as women with caring responsibilities, those on low incomes or in precarious employment, ethnic minorities and those with disabilities. Black-owned businesses are four times less likely to be approved for loans and there is also a short-term income shock for those who have been newly-diagnosed with cancer which can make it difficult to meet mortgage or other monthly payments for example,”
The government defined financial inclusion in a report to the select committee in 2017 as meaning “that individuals, regardless of their background or income, have access to useful and affordable financial products and services. These include products and services such as banking, credit, insurance, pensions and savings, as well as transactions and payment systems, and the use of financial technology”
With auto-enrolment, employers are assisting to some extent with the pension conundrum, but can employers do more to be financially inclusive? Can an employer have a positive influence on an employee’s financial wellbeing? After all, research has shown that an employee’s financial concerns could impact overall business performances, so is it in an employer’s interest to consider this?
For many, now will not be the right time to examine reward and benefits strategy, but smaller things can help. Ideas we have seen employers using are:
- Financial wellbeing days – over and above their annual leave, employees can book a day off per year, to sort out their personal financial affairs – such as determining the best value utility company, meeting with their banks, speaking to their credit card companies or loan providers or simply for time to review their personal budgets.
- Access to technology – some employees do not necessarily have access to computer technology at home. Offering employees access to a computer facilities they can use to contact financial institutions, access money and budgeting assistance websites or undertake their online banking may be of assistance. This may include amending your IT & communications policies.
- Encourage savings through payroll linked savings accounts.
- Encourage employees to share their concerns – clearly an employer cannot be a financial advisor, but if employee have worries they could be direct to an appropriate body such as the money advice service – https://www.moneyadviceservice.org.uk/en
LexLeyton offer a full employment law and HR service and whilst we cannot assist with or give financial advice, we are here to help you deal with any welfare issues you may be experiencing with your employees. For a free consultation on this or any other HR or employment law issue don’t hesitate to reach out to us at firstname.lastname@example.org