One in four people performing poorly at work due to money worries

With rising inflation likely to lead to pay squeezes, firms need to do more to help their employees cope with financial concerns.

Londoners are more likely than the UK as a whole to value being able to save money for the future

Londoners are more likely than the UK as a whole to value being able to save for the future

A quarter of people are suffering with money problems so substantial that it is affecting their ability to do their job, according to a new survey of more than 1,800 UK employees. The number reporting problems rises to a nearly a third (31 per cent) among 18-24 year olds, and those living in London (32 per cent).

The research, published by the CIPD and Close Brothers Asset Management, highlights why organisations need to be doing more to promote and actively support financial well-being, especially in a climate where pay will be squeezed as inflation rises.

Money worries negatively affect motivation

The problem is not limited to low earners either, with one in five (20 per cent) of employees earning £45,000 to £59,999 saying that financial anxiety has affected their ability to do their job. Meanwhile, women are more likely than men to report that money worries are affecting their work, nearly three in ten (28 per cent) women report the problem, compared with less than one in four (23 per cent) men.

Charles Cotton, reward and performance adviser at the CIPD, the professional body for HR and people development, thinks that this report shines a light on how financial well-being can impact not just employee health, but also workplace productivity. Money worries affect people regardless of their age, gender or level of pay, and with one in four admitting it negatively impacts their work, it’s clear that organisations should be focussing on financial well-being as part of their workplace agenda.

This will become increasingly important over the next 18 months, as rising inflation is likely to lead to a pay squeeze and increased concerns about personal finances.

Cotton continues, ‘Employers not only have a duty of care to their employees but will also see their bottom lines benefit if they invest time in developing a financial well-being strategy and play an active role in supporting staff in this area. Today’s businesses need to consider the impact financial worries are having on employee health, happiness and productivity and look at what they can do to help reduce stress levels.’

Higher wages won’t solve the problem

The report also focussed specifically on what could be done to improve financial well-being. While earning a higher wage was the top cited solution, a third of employees (32 per cent) did not include this in their top five, demonstrating that boosting pay was not enough. Other solutions chosen included being rewarded in a fair and consistent manner (41 per cent), being able to save for the future through a pension (26 per cent), and being able to develop and progress in their career (20 per cent).

Jeanette Makings, head of financial education at Close Brothers asset management, comments, ‘Pensions changes, increasing life expectancy, uncertain economic times rising inflation and constant changes to the tax system mean that the financial landscape has never been more difficult to navigate.

‘Money worries now weigh heavily on a huge number of employees across the country, impacting their performance in the workplace, so it is more important than ever that employers recognise the role they can play in helping staff to understand and improve their financial well-being.

‘Equipping staff with the tools they need to take control of their finances now and for their future will not only improve their own well-being, it has been proven to boost productivity levels – benefiting both business and workers.’

Londoners more concerned about saving

Physical fatigue caused by lost sleep worrying about money is the most common explanation for how financial concerns have impacted people’s productivity, one in five employees (19 per cent) report this.

Nearly one in three employees (30 per cent) in the public sector say money worries have affected their job performance.

Workers in Wales are more likely to rate being able to comfortably pay off existing debts as an important aspect of their financial well-being (55 per cent) than the UK as a whole (45 per cent).

Londoners (60 per cent) are more likely than the UK as a whole (38 per cent) to value being able to save for the future.

Charles Cotton adds, ‘Financial well-being is a sensitive issue, and employers need to recognise that employees may be cautious about discussing their financial circumstances with their colleagues, but getting the system right will ultimately benefit everybody involved. Employers should create a well-rounded reward strategy that recognises this and can flex to meet the individual needs of each employee.’

Further reading on employee money and pay

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