Financial wellness – your workforce is in the worst shape since the ‘60s

Free love, bell bottom jeans, Hippies, Grateful Dead, the Beatles all spring to mind when you think of the 60s. It was also a time where UK households after a post war hangover began to spend like never before. The household savings ratio was at an all-time low with access to credit beginning to become more widespread.

However out of the haze of the ‘60s came a new age of financial responsibility where households began saving more and the culture of Britain became a little more stoic. That was of course until the roaring ‘80s where fast cars and city boys took over and the era of deal making and junk bond kings caused both a credit and spending spike which took us back to the saving levels of the ‘60s.

Recession at the end of the ‘80s caused a significant tightening of the belt for the UK household which remained until the labour Government of 1992, who under the anthem of ‘things can only get better’, drove the largest increase in household debt and spending ever seen in the UK. Predictably this all came to a rather nasty end in the 2008/09 financial crisis.

So what?

Up to this point you may be thinking ‘so what’? Well, it is under these conditions that Government intervened and decided to launch the auto-enrolment initiative. This is a great policy which means all employees must now have a workplace pension unless they specifically opt out. This guarantees at least some sort of retirement pot at the end of an individual’s working life.

However, looking at recent ONS data it appears that despite this initiative households are now saving less than ever before. Worryingly household debt is now approaching levels not seen since the 2008/2009 financial crisis. So, in this economy of low savings rates and high borrowing people are less financially resilient than ever before.

Employers are waking up

Employers are slowly waking up to the fact that more needs to be done to help employees manage their finances. Without more intervention, staff will be unable to retire as and when they want, meaning many workforce planning strategies will be left in tatters. Financial stress is also one of the main drivers of long term absenteeism all of which hits a company’s bottom line.

Luckily technology is increasingly filling the gap to help employees make better financial decisions. Financial wellbeing strategies have become much more widespread and are going well beyond bland financial education and seminars, focusing instead on more proactive solutions such as digital professional advice which gives real, usable solutions to employees, rather than leaving them to make decisions on complex financial issues alone.

The post financial crisis era has been epitomised by access to easy money and incentives to spend. When the next inevitable bust does appear, workforce’s in their current state have never been so unprepared to deal with it. The time for employers to tackle this issue is now. It has never been more affordable or easy to deliver effective financial advice and wellbeing solutions to the workforce.

Phil Blows is director of Wealth Wizards.

This article was provided by Wealth Wizards.