Posted on: Wednesday March 24, 2021
Debt Awareness Week takes place 22-28 March 2021, so this week we’re talking about debt and how to help employees who may be struggling in silence.
What’s the situation?
Even before COVID-19, the Money Advice Service estimated that 8.3 million people in the UK had problem debt, meaning that they struggle to cope with the money they owe. The pandemic has pushed many households into difficulty because of life events like job loss or a period of illness, which means their income has gone down. In this situation many people borrow to make ends meet, but it can be difficult to make repayments and sometimes finances hit a crisis point.
Why should employers get involved?
That’s one in six people dealing with problem debt, so it likely affects a large group of your employees. The fact that employers have historically thought of their employees’ finances as a private matter should not now prevent them from offering support as part of a holistic wellbeing package. We are seeing an acknowledgement of the links between mental, physical, and financial wellbeing, with money worries significantly contributing to mental health problems.
One in four UK workers reported to the CIPD that money worries have affected their ability to do their job. Financial worries can impact productivity in several ways – whether through losing sleep, lack of focus, stress, depression, or other mental health conditions. As a result, employers looking to reduce the number of absence days and improve performance are increasingly focused on the link between financial wellbeing and greater productivity.
So how can employers help?
Let your workforce know that they can get free, confidential and independent money and debt advice from the government’s Money and Pensions Service. There are a number of charities and free organisations which can help work out the next steps; signpost employees towards the Money Advice Service’s tool to find the free debt advice providers and local services.
If you offer an Employee Assistance Programme, consider promoting this as somewhere to go for debt advice or mental health concerns around money worries. Personal Group’s Hapi-life channel also has articles on financial wellbeing which you can share with staff.
It’s worth saying that financial wellbeing isn’t just about how much money people have. It’s about the control that they feel they have over their finances, and the skills and capability people have to manage their money.
Employers have a key role to play here. They can enable employees to make informed decisions, as well as help them feel more in control of their finances. Organisations can help their staff through signposting them to relevant guidance, information and support, as well as providing this themselves, either directly and/or through a trusted partner. For example, you could offer webinars or conferences, clinics, 1:1 financial mentoring, support groups, assessments and budgeting advice.
Even before the pandemic, problem debt affected a significant proportion of UK households. Many employees will now be facing additional financial strain and would benefit from extra support.
To find out more, download our financial wellbeing report for employers here.