Employee wellbeing has played a significant role in attraction and retention strategies for a number of years, focusing predominately on mental health and a work-life balance. Financial wellbeing is a welcome addition to this agenda.
Multiple researchers have demonstrated that financial stress is one of the most significant causes for absence and lost productivity among employees. Debt and unexpected bills can trigger anxiety and other mental and physical health concerns, but money makes the world go around and advertisers continue to saturate potential consumers with bigger and better things to spend on. These challenges are often compounded as school leavers continue to enter the workplace with zero financial education behind them.
The point? The national minimum wage cannot alone support employee financial wellbeing. Employees need to be informed and empowered to make sound financial decisions, regardless of their earnings potential. Some employers have stepped up in this area, offering budgeting tools, support towards financial planning, early-wage access schemes, financial health clinics and guidance tools, to name a few examples.
The national minimum wage plays an important role in setting a benchmark for employers on pay. However, employers should be encouraged to look at their pay structure as a whole and review their own business model. Some businesses have struggled to survive through the pandemic and the increase in minimum wage in April 2022 will be seen as another hurdle to tackle. Others have thrived.
Employers must consider fairness across their whole reward structure when implementing a financial wellbeing strategy. Pay is one tool, benefits another, education also plays a part. The real benchmark for positive employee financial wellbeing is a fair pay structure that reflects business performance and individual role responsibility, while providing the tools to support, educate and inform employees to make healthy financial decisions.
Samantha Johnson is the policy lead at the Chartered Institute of Payroll Professionals