Beating financial stress
Wendy Muirhead on how on-demand pay can boost employee financial wellness
With UK inflation set to rise to 6% or more in April, financial stress is at an all-time high as households face the biggest income squeeze in a generation. Even before the economic uncertainty of the pandemic, the average UK employee was living payslip-to-payslip, and it’s no wonder the start of the year is already taking a heavy toll.
The impact of employee financial stress
Households are facing soaring bills and higher costs of living, making it more important than ever for employers to help workers feel more knowledgeable, prepared, and supported when it comes to their financial well-being. The Money and Pensions Service’s Financial Wellbeing Survey 2021 found that about one-in-two adults (45%) in the UK don’t feel confident in managing their money day to day and one-in-three (36%) state that thinking about their financial situation makes them feel worried.
Prolonged financial stress, such as credit concerns and the inability to meet daily expenses negatively affects mental and physical health and can lead to workplace absenteeism, decreased productivity and increased turnover. Research from Close Brothers Group found that 77% of employees say that money worries impact them at work. The data is clear: financial stress impacts pivotal career and life decisions.
Financial stress, such as credit concerns and the inability to meet daily expenses negatively affects mental and physical health
Challenging the payroll cycle
Finances determine which jobs workers can afford to accept, their ability to upskill, and when they can retire. Supporting employee financial well-being is vital to bolstering productivity, increasing engagement, and creating a healthy workplace where employees can reach their potential. In fact, Ceridian’s 2022 Workforce Resolutions Survey found that 30% of UK workers would like their employers to prioritise enhanced financial wellness in 2022.
When it comes to financial wellness, employee offerings should be based on organisational data, so programmes have a positive, and measurable impact on the business. Examples of wellness offerings are financial literacy programme, and retirement plan matching. In addition, a relatively new and growing trend when it comes to financial wellness is when organisations provide employees with early access to their earned wages.
On demand pay, also known as earned wage access, gives workers the option to tap into their earned wages before the traditional payday. By opting into solutions that provide on-demand pay, employers can give workers real-time access to their net earnings, without having to wait for a fixed payday.
Whether you’re living payslip-to-payslip or not, workers are increasingly seeking a more modern way to access their earnings. In a world where we can get anything instantly with one click, the traditional monthly or fortnightly pay cycle is outdated.
Prioritising financial wellness
Helping employees build lasting financial strength and stability through greater autonomy over their earnings lessens financial stress and leads to a more solid and productive organisation with higher employee satisfaction. Financial wellness can also be integral to recruiting and retaining top talent, with employees placing a high value on opportunities that improve their financial stability.
It's time for employers to move beyond a traditional one-size-fits-all approach to financial wellness. As we enter the third year of a pandemic, the financial well-being of workers should be a key priority for employers seeking to build a more financially knowledgeable and secure workforce.
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