Monica Kalia: Overcoming the workplace disconnect on financial wellness

Nearly one in four employees think their employer does not care about their financial wellness. Yet three-quarters of employers believe that they do. Over half (56%) of employers think that they help their employees with their ability to manage money, but 39% 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 2017, published in May, financial wellbeing provider Neyber asked 10,000 employees and 500 HR directors and influencers for their views on money matters at home and in the workplace.

The study 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%. For those aged between 18 and 24, that figure rises to 45%, 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% for 25% and 21% respectively.

Such significant fluctuation in earnings makes managing day-to-day money and longer-term savings difficult. The study found that 24% of employees have less than one month’s savings to fall back on, should they lose their main job. That figure rises to 39% in the 18-24 age group.

Despite those challenges, 85% of employees say that they do save, most commonly into a bank or building society (54%). A more surprising result is the 22% who said that they saved into a jar at home.

Borrowing habits show more cause for concern, however. The research 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% of 25-34 year olds), savings (20% of that age group) and friends or family members (21%). Worryingly, 6% of this age group are approaching payday lenders, and 4% 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% 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% of 18-24 year olds saying that their views on finances have been affected. Political changes in the UK have affected 39% of this age group (27% overall) when it comes to finances.

While employers might over-estimate how much they are supporting employees with their financial wellness, they are certainly aware that employees are struggling. Six out of 10 (61%) employers said that they felt Brexit is affecting how employees feel about their finances, and 40% believe that financial concerns are causing their employees stress. In addition, 23% believe employees are losing sleep because of money worries. Those figures are very close to those reported by employees themselves, with 34% reporting stress due to money worries in the last year, and 24% losing sleep over their finances. More than a quarter of employers (26%) also believe that they have employees in their workforce who are financially excluded (that is they 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. The survey shows that it is in the interests of both employers and employees to support financial wellbeing. And while it is 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’ view of the same, better quality conversations in the workplace are required. Helping employees 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.

Monica Kalia is co-founder and chief strategy officer at Neyber