Beyond paying a fair and living wage, employers play a crucial role in helping working people to escape poverty in other ways. Our financial wellbeing depends on more than how much we’re paid – it’s about feeling secure and in control, knowing you can pay the bills today, can deal with the unexpected, and are on track towards a healthy financial future.
By offering employee benefits that help incomes go further, sign-posting relevant financial advice and guidance, and creating a safe place to talk about money worries, employers can make a big difference to people’s lives.
The case for financial wellbeing support
The moral case for supporting financial wellbeing is clear, but there’s a compelling business case too: research shows that when we’re worried about money, our work suffers. Poor financial wellbeing can lead to increased absence and reduced productivity. Employees with access to financial wellness programmes report feeling more focused on their job and more positive about coming to work and being part of their organisation.
Beyond the business case, businesses have a responsibility to support their employees’ financial wellbeing too. Investors and consumers are increasingly recognising this, with more and more concerned about how workers in the firms they invest in – or buy from – are treated.
Make your benefits package work harder for those at risk of poverty
Providing the right employee benefits – and ensuring staff can access them in an inclusive, accessible manner, regardless of digital proficiency – is crucial to helping people escape poverty. The right benefits can help to offset the 'poverty premium', increase your people’s spending power, and protect them from financial shocks.
Research by the Joseph Rowntree Foundation (JRF) has found that ‘low earners attach greater value to those benefits that mitigate their highest living costs, such as food and leisure, travel, childcare, housing and utilities’. Here’s how the JRF suggests you can help in these crucial areas:
- Housing and utilities: Introduce rental deposit schemes, accommodation and rent subsidies, and technology and telecommunications loans or subsidies.
- Childcare: A range of benefits can help to mitigate childcare costs, including flexible working, paid time-off for caring responsibilities, subsidised childcare, or aiding access to the Government’s Tax-Free Childcare scheme.
- Travel: If possible, offer transport season ticket loans, travel expenses, company car/van, cycle-to-work/bike loans, and work bus/public transport subsidies.
- Food and leisure: Retail and leisure benefits have become more common – these may include free or subsidised meals and drinks, shopping and lifestyle discounts, vouchers, and sporting and recreational facilities.
Many employers now offer employees crisis loans to protect them from unexpected financial shocks, occupational sick pay to enable them to take time off when sick without risking their livelihood, and the option to choose how often they’re paid. Our latest reward management survey (to be published in March 2022) found that 14% of employers offer some or all of their employees early access to pay (where employees can receive their pay when they need it rather than when their pay period ends). In some industries/local areas, employees can benefit from financial products offered through Credit Unions, which help to protect them from the ‘poverty premium’ they may face if they rely on other, more expensive, credit options.
Whatever your benefits package looks like, make sure you regularly remind your workforce what’s on offer and how it could help them.
Despite the rising cost of living, one in five workers feel their employer is not doing enough to support their financial wellbeing – rising to almost one in four for low-paid workers.
So what more can employers do to recognise both the moral and business case for helping employees who are struggling financially?
Empower your people to support their own financial wellbeing
A financial wellness programme could be as simple as using your existing internal communications channels to signpost free and independent financial wellbeing advice (such as that available from the Money & Pensions Service), alerting staff to the dangers of financial scams, or reminding people of the range of employee benefits you offer.
Employers who can dedicate more resources could consider a financial education programme that targets interventions at key moments in working lives – for example, ahead of maternity leave, the purchase of a new home, or preparing for retirement.
The pandemic has no doubt focused many employers’ minds on fairness and in-work poverty. We’ve seen many employers really step up to the plate when it comes to supporting their employees’ mental wellbeing, and we’d like to see the same attention given to their employees’ financial wellbeing. For too long it's not been a focus or well enough understood, but we know how important financial wellbeing is to overall wellbeing and employers can make a real difference.
Senior Performance and Reward Adviser at the CIPD
Increase take-up of financial wellbeing support by normalising conversations about money
To encourage employees to access help when they need it, HR teams should use internal communications channels to regularly discuss money issues and signpost support. By increasing your own awareness of the drivers of in-work poverty and how it can affect people’s lives, you’ll be better placed to make your communications relevant and relatable. Involving employees in the development of your financial wellbeing strategy can also help break down barriers.
HR teams should use a variety of mechanisms to engage with staff – like surveys, forums, polls and webchats. This data can help employers design and refine their financial wellbeing policies, as well as assess their effectiveness.
Line managers also play an important role in spotting financial distress and sign-posting support – but shouldn’t provide financial advice themselves. Train line managers to regularly and sensitively check in with their teams’ overall wellbeing. But bear in mind that every employee’s financial circumstances are incredibly personal, and many staff will be reluctant to talk. Staff will only confide in their managers about their financial worries if they can trust them to be non-judgemental and helpful.
Talk Money Week encourages people to open up about their finances to improve their physical, mental and financial wellbeing. The Money & Pensions Service provides a participation pack to help employers kick-start these conversations in their workplace