Katie Evans: Why HR and reward professionals must understand financial wellbeing
One in four people across the UK experience a mental health problem in any given year. That’s just the number who would be diagnosed with a medical condition by a doctor.
A substantial proportion of these people will not realise that they’re ill, and won’t seek help from medical professionals, or will seek help and find themselves sitting on a waiting list.
Many more people will, at any given time, be experiencing stress or anxiety which, while not severe enough to justify a clinical diagnosis, leaves them feeling tired or strained.
These strains on our mental health put pressure on our employers too.
Analysis of Understanding Society, a major UK-wide survey of 40,000 households, shows that a third (34%) of all workers said they accomplished less in the four weeks prior to the survey than usual due to their mental health.
One in six (16%) reported that they found it difficult to concentrate at times. In total, 40% of people in work were found to be experiencing at least one sign of stress which could affect their ability to work - for example, loss of sleep or lack of concentration.
Mental health problems
Of course, many things can lead to poor mental health, and not all of them are issues that employers can address – family breakdown or bereavement, for example.
Financial distress, however, is both a significant contributing factor to mental health problems and an issue employers are well-placed to tackle. Four in ten workers report that they have felt stressed over money worries in the past year, and a quarter say they’ve lost sleep over cash flow concerns.
Low financial capability
Employers might worry that I’m about to suggest that a pay-rise is the only possible solution. But in fact, our financial wellbeing is as much about what we do with our cash as how much of it we have. Even relatively affluent households can find themselves in financial difficulty if their circumstances suddenly change.
Financial capability - our ability to manage our money day-to-day and plan ahead - is woefully low across the UK. A staggering proportion of our workforce are financially vulnerable: one in three workers (29%) has no savings at all, four in ten workers have some form of non-mortgage debt (a loan, overdraft or credit card) and nearly half (48%) of UK workers aren’t putting money aside for anything other than regular bills.
Against this backdrop, something as common as a broken down boiler or washing machine can cause a financial crisis.
Incentives to save
So what can employers do to help? The first thing would be to think about ways you can help your workforce to put some short-term savings aside, just in case. Just as auto-enrolment has encouraged pension saving, you might want to consider linking up with a local credit union to provide a payroll savings scheme.
If your employees join a credit union through you, they’ll also have access to affordable credit if they should need it.
The impact on the mental health of the UK workforce of financial worries can have a big impact on employers’ operations. Understanding this, and tackling it with these relatively low-cost simple steps could help boost the wellbeing of your workforce – and your productivity to boot.
This article is written by Katie Evans, Head of Research and Policy, Money and Mental Health Policy Institute
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