Last year, it was recorded that household debt in the UK was ‘worse than at any time on record’.
The average total debt per household, including mortgages, was £59,288 in October 2018 – that’s over £30,000 per adult.
It’s therefore likely that you as an employer will, at some point, hire someone who is experiencing financial difficulties. Despite this, around half of employers disagree that their employees’ financial wellbeing is their responsibility.
Employees who are worrying about money are likely to be stressed, and even anxious, compromising their focus and leaving them prone to making mistakes at work. As a result of the stress they are under, they are also more likely to take time off work for illness.
Studies have shown that debt can actually trigger a mental health problem, or worsen an existing condition. One-in-four British adults with a mental health problem also struggle with problem debt, while those with problem debt are twice as likely to develop major depression as those not in financial difficulty. In the words of Martin Lewis, founder of Money Saving Expert: “Be under no illusions. Mental health problems can cause severe debt, and severe debt can cause mental health problems.”
With that in mind, here are our tips to help you support your people with money problems:
1. Financial education
Many adults struggle to manage their finances due to financial products, such as pensions and loans, becoming more and more complicated and a lack of financial education at school. About 17m workers possess the numeracy skills of a primary school child, according to research by charity National Numeracy, and estimates poor numeracy could cost the economy £20bn per year.
Financial education can be as simple as providing leaflets, email newsletters, workshops or one-to-one sessions on basic financial management skills. Where possible, the rule of thumb is to offer employees a range of sources to get their information from.
2. Consider paying a living wage
With a 5.7 percent decrease in the average real wage, more people are struggling to make ends meet. Also known as the ‘real Living Wage’, The Living Wage Foundation offers accreditation to employers who pay an independently calculated Living Wage (this is different to the Government’s ‘National Living Wage’). It’s based on what families need to live and, as of January 2019, it stands at £10.55 per hour for London and £9.00 per hour for the rest of the UK.
According to the Living Wage Foundation, 93 percent of Living Wage business have reported benefits since becoming accredited. Additionally, 86 percent of Living Wage employers reported improved business reputation and 75 percent said that staff motivation and retention rates improved.
3. Create a culture of support
Creating a culture where employees feel comfortable about seeking support can make all the difference. Recognising that financial stress is usually temporary and not a sign of the employee’s character is important, as is letting your employees know where they can turn if they are in financial difficulty.
Employees are the greatest resource of any business, and ensuring they get the financial support they need is an important step towards fostering a happy, healthy work environment. Being proactive in supporting your employees demonstrates your dedication to wellbeing in the workplace, making work a less stressful – and more productive – experience for everyone.