Nearly one in four employees believe their employer doesn’t care about their financial wellbeing. Yet three quarters of employers believe that they do. Over half (56 per cent) of employers think that they help their staff with their ability to manage money, but 56 per cent of employees say that their workplace offers poor or no support with this.
How has this disconnect happened? And what effect is it having on the UK’s workers? In a new piece of research, The DNA of Financial Wellbeing, fairer finance provider Neyber asked 10,000 employees and 500 HR directors and influencers for their views on money matters at home and in the workplace.
We found that many employees are struggling financially. This is particularly true for younger workers. A quarter of all respondents said that their income fluctuates on a monthly basis by more than 10 per cent. For those aged between 18 and 24, that figure rises to 45 per cent, and even in age groups that might be expected to be more stable financially there is still significant uncertainty around monthly income. Of those aged between 35-44 and 45-54, income fluctuated monthly by more than 10 per cent for 25 per cent and 21 per cent respectively.
Such significant fluctuation in earnings makes managing day-to-day money and longer-term savings difficult. We found that 24 per cent of employees have less than one month’s savings to fall back on, should they lose their main job. That figure rises to 39 per cent in the 18-24 age group.
Despite those challenges, 85 per cent of employees say that they do save, most commonly into a bank or building society (54 per cent). A more surprising result is the 22 per cent who said that they saved into a jar at home. Borrowing habits show more cause for concern, however. We found that two thirds of those aged under 34 have to borrow each month to get by. The most common sources of borrowing are credit cards (33 per cent of 25-34 year olds), savings (20 per cent of that age group) and friends or family members (21 per cent). Worryingly, 6 per cent of this age group are approaching payday lenders, and 4 per cent loan sharks.
The political upheavals caused by Brexit and broader uncertainty in UK politics is also affecting how employees feel about their money, with 35 per cent of all employees saying that the decision to leave the EU has influenced how they view their finances. Again, this is felt most keenly by younger workers, with 51 per cent of 18-24 year olds saying that their views on finances have been affected. Political changes in the UK has affected 39 per cent of this age group (27 per cent overall) when it comes to finances.
While employers might overestimate how much they are supporting staff with their financial wellbeing, they are certainly aware that employees are struggling. Six out of ten (61 per cent) of employers said that they felt Brexit is affecting how staff feel about their finances, and 40 per cent believe that financial concerns are causing their staff stress. In addition, 23 per cent believe employees are losing sleep because of money worries. Those figures are very close to those reported by employees themselves, with 34 per cent reporting stress due to money worries in the last year, and 24 per cent losing sleep over their finances. Over a quarter of employers (26 per cent) also believe that they have staff in their workforce who are financially excluded (ie cannot access goods or services conveniently at a reasonable cost).
Both employers and employees suffer as a result, through lower productivity at work and knock-on effects such as poorer quality decision-making. Our survey shows that it’s in the interests of both employers and employees to support financial wellbeing. And while it’s clear that employers know about the financial problems facing their workforce and, in principle at least, are keen to support them, the messages are not getting through.
In order to close the divide between employees’ perceptions of how well their employer supports them and business’s view of the same requires better quality conversations in the workplace. The DNA of Financial Wellbeing provides an ideal starting point for employers, showing them some of the broader issues facing the UK’s workforce. Helping staff to understand the options available to them and introducing benefits such as affordable lending to support employees when they need it most could be the answer.
Heidi Allan is head of insights and engagement at Neyber.