Is financial wellbeing a fad or the 'new normal' in employee benefits?

The financial health or wellbeing of employees has been an area where employers have historically been cautious and generally steered clear. 

While employers have actively offered employee benefits which support physical health and more recently mental health, financial health has been a step too far. Personal finance has been considered just that: personal. And the role of the employer has been to pay/remunerate as well as they can and not to get further involved.

However, times are changing and they are changing fast. 

There have been numerous recent and respectable research reports (including a YouGov poll commissioned by Salary Finanace) which, put simply, show that the average employee in the UK is financially unhealthy and that it is having a direct and negative impact on their work.

This problem is inspiring a range of new and innovative employee benefits, focussed on helping employees to improve their financial health, and consequently their performance and engagement at work.

Mainstream or passing fad?

The question is whether these financial wellbeing employee benefits will become mainstream or are they just a passing fad? For me, this comes down to a simple question of employee demand: if employees need, value and use the new wave of financial wellbeing benefits, it's reasonable to assume employer adoption will continue to increase, and the benefits will soon start to become part of the new normal.

Two recent pieces of research caught my attention and suggest that employee demand is set to continue and likely to strengthen.

The first is the Office for National Statistics (ONS) 2015 Annual Survey of Hours and Earnings (ASHE) which showed that the real value of earnings in the UK has fallen by 13.4% since 2007. That’s not to say employers are paying less, it's that the cost of living/inflation has increased much faster.

With people earning less in real terms, personal debt continues to increase. The March 2016 MoneyCharity report reveals that at the end of January 2016, people in the UK owed £1.46 trillion; an extra £631.15 per adult since the previous year.  They anticipate that by 2021, household debt will rise further to £2.551 trillion (a further 75% increase).

These and other indicators suggest that the financial health of the average employee in the UK will continue to be problematic, with the associated distress impacting their work. 

Employers would be wise to take action now and support their employees improve their financial health, through innovative and targeted employee benefits, as a way to better engage their staff, improve their performance and create more loyalty.

This article was written by Asesh Sarkar, chief executive at SalaryFinance.