Ways to support financially vulnerable employees
To support everyone in the workforce, we must first understand who is likely to be most at risk of experiencing financial hardship or instability.
Financial vulnerability can manifest in different ways and is influenced by various economic, social and personal circumstances such as:
- A lack of financial literacy: Financial literacy is the ability and knowledge to make smart decisions with money. Although many of us may think we know how to manage money, almost three quarters of people in the UK struggle with financial literacy, according to a survey by Shepherds Friendly.
- A lack of savings: insufficient savings or not having an emergency fund, can leave many people without a safety net should the unexpected happen (eg losing a job or a medical emergency). One in seven people in the UK have no savings, 34% have less than £1,000, while that also applies to almost half of 18 to 24-year-olds.
Providing financial education/workshops or access to financial advisors can help staff better understand their savings and investments and make more informed financial decisions, helping to reduce financial vulnerability. Financial advisors can offer personalised advice and help reduce financial burden.
- High levels of debt: In the current economy, many are forced to use credit cards to cover essentials or take out high-interest loans that could make it difficult to manage monthly repayments on top of bills.
Research by Nationwide found that 63% of people in the UK are worried about finances and their ability to cover essentials and almost four in 10 have used credit cards to pay for essential household bills.
Half of people in problem debt have a mental health problem. Ensuring help and support is easily accessible is crucial to help protect mental health as the economy looks unlikely to improve in the short term.
Almost 40% of people with a mental health problem say their financial situation makes it worse. With long NHS waiting lists and overburdened mental health services, robust employee assistance programmes can help bridge the care gap for many.
Employers should offer a degree of flexibility with working environments/hours (where possible) to help employees make savings, for example staying at home to save on the commute or going into the office more often to save on household bills.
- Child/care responsibilities: According to research by YouGov, almost one quarter (24%) of parents in the UK have skipped a meal in the last year to feed their children. Unfortunately, that leaves many women more financially vulnerable than men.
A report by Legal & General found that the average salary for a woman in the UK is £23k, compared with £31k for men. Additionally, the Centre for Progressive Policy found almost half of working women do 45+ hours of unpaid care work each week, compared with an average of 17 by men – leaving women in a disproportionately more vulnerable position than men.
It is crucial employers are fair and working towards closing the gender pay gap, ensuring women are paid the same as male counterparts for the same jobs/responsibilities and are offered progression opportunities to increase their salaries and meet career goals.
- Unforeseen circumstances: Events such as an illness or loss of a breadwinner can spiral financial insecurity and may affect an entire family. Salaries are only stretching far enough and need to ensure they are realistically set to deal with inflation and the cost of living.
Providing benefits such as group income protection can help offer peace of mind should something unexpected happen, helping employees remain financially stable in the face of uncertainty.
Offering financial help such as access to discounts or helping cover costs of health and wellbeing benefits can help protect employee wellbeing and provide access to otherwise unaffordable items. In recent surveys:
- 28% of employees chose retail and leisure discounts as their top benefit.
- 22% of employees chose free/discounted gym memberships as their top benefit.
- Only 6% of employers believe their organisation is very good at supporting budgeting and money management.
- 48% of employers do not offer financial wellbeing benefits/services.
Regular check-ins and communications to remind employees of what is available may increase use and help keep support front of mind for when it is needed most.
It is important for employers to remember that a safe and supportive environment to help meet all employee’s financial needs is an ongoing effort.
Regularly and proactively assessing the effectiveness of implemented initiatives is needed to ensure employees’ needs are being met.
Supplied by REBA Associate Member, Spectrum Life
Supporting 4m+ lives in the corporate, education and insurance sectors with our health & wellbeing solutions.”
