Landmark research released today from pension and investment company, Aegon, reveals the impact of poor employee financial wellbeing on the UK economy.
Over four million days are taken off every year because of financial worries, while those who suffer at work say it can cost them up to two hours of output per day. This productivity hit costs businesses in the UK £1.6bn each year.
The report, the first of its kind, carried out in partnership with the Centre for Economics and Business Research, systematically explores and analyses financial wellbeing across UK employees and calculates the impact on workplace productivity.
The research shows workers worry more about money while at work than other key issues, such as family problems and health concerns. Younger workers are among the worst affected, despite many saying they’re doing everything they can to secure their long-term financial future. Smaller companies are also more susceptible to this problem.
Ronnie Taylor, Workplace Savings Director at Aegon, said: “Poor financial wellbeing is a huge issue impacting both employers and employees. We’ve uncovered significant evidence that it is damaging productivity in workplaces up and down the country.
“There is a need for businesses to understand more about this issue and urgently address its causes. This has been a long-term problem for employers, but our research shows that those who can focus on and address this issue are likely to reap significant benefits to their bottom line.”
The report analysed data from 2,000 UK employees across a range of industries, company sizes and job roles. As well as finding views on money concerns, the research calculated scores based on the financial wellbeing scale, first established by the US Consumer Financial Protection Bureau and adapted for the UK. This measure is based on a variety of factors, including respondents’ capacity to absorb a financial shock and their ability to make choices that allow them to enjoy life.
Those who had taken days off or experienced falls in productivity due to money worries also scored low on the financial wellbeing scale.
Younger workers and small businesses feel the pain, employees look for help
While younger workers experienced the most money worries, and lowest financial wellbeing scores, they are the generation who feel they are doing the most to prepare for the future.
Just under half (46%) of people under the age of 35 say they are doing everything they can to secure their financial future, compared to just over a third (37%) of people aged over 55.
Meanwhile, 43% of that group now feel they will never have everything they want in life due to financial constraints.
Smaller businesses were also hit. 34% of people working in small companies (fewer than 50 employees) agree they are only getting by financially compared to 28% in large companies (250+ employees).
This could reflect greater efforts made by larger employers to promote the financial well-being of their staff. The report shows that the employers that fall short on financial education are those with employees with the lowest financial wellbeing scores.
While 35% of employees feel they would benefit from receiving financial education, just one in seven are currently receiving this from their employer.
Separate research carried out by Aegon found 45% of employers feel they would be intruding in their employees’ lives if they approached them about their financial concerns, while nearly half feel it isn’t their placed to get involved. This is despite three in four employers saying their employees’ productivity has been impacted by money worries.
Ronnie Taylor added: “Employers need help when it comes to improving employee financial wellbeing. Many aren’t aware of what they can offer employees, while others simply don’t feel it’s their place. That needs to change. Our research shows employees both need and want some kind of financial support and highlights just what a difference it can make.”
These findings come as part of a wider campaign launched by Aegon which aims to tackle financial wellbeing in the workplace. To do this, Aegon is calling for:
- An increase in awareness among employers of the Government’s £500 allowance for pensions advice for each employee
- A shift in mindset so that financial wellbeing is viewed of equal importance as traditional physical and mental wellbeing
- Greater support for employers to offer financial education for employees and better communicate the benefits they already provide
- Effective tools for employees to plan their financial future with confidence driving positive financial wellbeing for today