Half of UK employers don't have a financial wellbeing policy, despite the financial impact of COVID-19 on employees.
The Chartered Institute of Personnel and Development (CIPD) is calling on all employers to recognise both the moral and business case for taking more responsibility for their employees' financial wellbeing.
Despite the financial hardship wrought by COVID-19, it says that half of employers (49%) don't have a financial wellbeing policy. Such a policy acknowledges that, as income providers, organisations play a vital role in their workers' financial wellbeing. The CIPD says it can be as simple as a commitment to signposting to independent money and debt guidance, offering access to low-interest loans and running pension workshops.
However, it seems the pandemic is changing attitudes to the role of employers when it comes to employee financial wellbeing. The latest Reward Management Survey from the CIPD has found that 12% of employers have introduced, or plan to introduce, a financial wellbeing policy in direct response to the pandemic (29% already had one).
Overall, 30% of employers say the pandemic and the economic crisis has prompted them to consider how fair their pay and benefits are. A quarter (25%) are taking corrective action or plan to do so. In addition, 24% of employers have explored how the pandemic has impacted their employees' financial wellbeing, so they're better able to identify the right kind of support.
The CIPD is encouraging employers to act quickly since new data shows that low-income workers have suffered the sharpest drop in earnings during the pandemic and the Financial Conduct Authority has revealed that a quarter of the UK adult population now have low financial resilience.
As well as affecting an individual's health and wellbeing, money and debt worries can impact people's performance at work, which can have knock-on implications for their employer's productivity and bottom line. However, the report suggests some employers don't recognise the strong business case for having a financial wellbeing policy.
The most common reason given by employers for not having a financial wellbeing policy was that senior management don't see it as a priority right now (49%). Other reasons given were:
- 27% said senior management don't have the time, money or expertise to create it;
- 21% said they weren't sure employees would want such a policy (this decreases to 11% for those who've asked their employees what impact the pandemic has had on their financial wellbeing);
- 20% aren't sure it would contribute to employees' wellbeing;
- 19% don't think a policy would improve their organisation's performance.
The retail, hospitality, catering, leisure and cleaning sectors were most likely to report that their senior management don't see a financial wellbeing policy as a priority (64%). However, employers in these sectors were also most likely to say they thought their employees' finances had been adversely affected by the pandemic.
"The pandemic has, unfortunately, hit many people's finances hard, with many losing their jobs and others seeing their income fall," said Charles Cotton, senior performance and reward adviser at the CIPD. "This has no doubt focused many employers' minds on fairness and in-work poverty - and it's good to see a number of them taking steps to protect people's financial wellbeing during the pandemic.
"However, it's also clear that there's an opportunity to do more. We've seen many employers really step up to the plate when it comes to supporting their employees' mental wellbeing during this crisis, and we'd like to see the same attention given to their employees' financial wellbeing. For too long it's been considered the poor relation to wellbeing but we know the two are intrinsically linked and should have parity."
Written by Rachel Miller.