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New research from the CIPD highlights fragile state of many employees’ finances, but highlights the positive impact workplace support can have

Despite rising inflation, nearly one in five employees (19%) say their employer is not doing enough to support their financial wellbeing, according to new research from the CIPD.  

The survey (which YouGov polled more than 2,500 employees for) underlines the fragile state of many employees’ finances, even before the cost-of-living crisis fully comes to bear, finding that: 

• Some are simply not earning enough to get by: around one in eight employees (12%) say their pay is not enough to support an acceptable standard of living without having to go into debt to pay for food/bills, and one in ten (10%) do not think their job protects them from falling into poverty. 
• More than a quarter (27%) report their pay is not enough to cope with a £300 emergency (without having to use savings), and only 47% said their pay is enough to help save for retirement. 
• One in four (28%) have money problems which affect their job performance, rising to 34% of those earning less than £20,000. For example, 19% have lost sleep due to worrying about money. 

The CIPD says employers need to start offering greater financial wellbeing support to their workers. Not only because they need to do their bit as a responsible employer in the midst of the cost-of-living crisis, but also to help them stand out as an employer of choice in today’s tight labour market. 

The CIPD argues all employers need a financial wellbeing policy that sets out its commitment to supporting people to achieve a decent standard of living. It says this is an essential part of good work and responsible business; and while recognising that several factors contribute to in-work poverty, believes employers can still make a difference in loosening its grip. 

As well as focusing on paying a fair and liveable wage, the CIPD recommends employers also provide financial wellbeing support – such as offering targeted benefits and normalising conversations about money – and do more to support in-work progression, to help people increase their earning potential. 

The research underlines the noticeable difference that a financial wellbeing policy can have on a workforce and the value employees place on it. More than four-fifths of employees (81%) whose employer has a financial wellbeing policy say it’s important any future employer has such a policy. What’s more, those employed by an organisation with a financial wellbeing policy are far more likely to say their employer does enough to support their financial wellbeing (60% versus 28%); and are more likely to say they are keeping up with all bill and credit card commitments without any difficulties (70% versus 58%). 

Employees working for an organisation with such a policy are also far more likely to say they have a good level of benefits (70%) than those with employers who don’t (28%). This could include such benefits as occupational sick pay, training and career development opportunities, flexible working, and gym membership. 

They are also much more likely to say their employer offers them a generous pension (64% versus 26%) and that their pay is enough to help them save for retirement (61% versus 41%). 

Charles Cotton, senior reward and performance adviser at the CIPD, the professional body for HR and people development, said: 

“Even before the current cost-of-living crisis unfolded, work was failing to protect many people from poverty and failing to support good financial wellbeing in the way it should. While the Government is best placed to provide immediate support for people affected by the cost-of-living crisis, our research shows there are opportunities for employers to do much more to support the longer-term financial wellbeing of their people.  

“The biggest difference an employer can make is to pay a fair and livable wage. But even organisations who can’t afford to increase wages right now can support their workforce in other ways.  

“Our research highlights that employers with a financial wellbeing policy really do make a much-valued difference to the lives of their people. Unfortunately, the cost-of-living crisis is likely to push more and more employees into in-work poverty. This, along with the competition for talent right now, should motivate all organisations to adopt a financial wellbeing policy or improve their existing one.”  

The CIPD has launched a new web hub, in collaboration with the Joseph Rowntree Foundation, which hosts a range of explainers and resources for employers who want to take action against in-work poverty. The hub explores the three areas of HR practice that a financial wellbeing policy should cover: 

Pay a fair and liveable wage: pay a wage that enables people to lead a dignified life and meet the real cost of living. Protect people on low incomes from working arrangements that don't suit their needs; and be transparent about how pay is set and how people can secure a pay rise. 

Provide financial wellbeing support: create a safe place to talk about money worries; sign-post relevant advice and guidance; and offer targeted and easy-to-access employee benefits that help incomes go further. 

Support in-work progression: help people to maximise their earning potential by developing skills that enable them to take on higher-paid roles and remove any barriers that prevent them from progressing or working more hours. 

Louise Woodruff, policy and partnership manager at Joseph Rowntree Foundation, said: 

“Work is a huge part of our lives, and employers have the power to make the difference between staff being on the edge financially, and offering them a firm foundation to be able to build a better life for themselves and their families. This isn’t just a question of paying people more, it’s also about policies and support that allow people to plan, to know what their income will be in advance, and to know how they would meet an unexpected cost. 

“Where employers can help their staff through the current pressures on their cost of living, they are likely to reap the benefits in terms of loyalty, retention, and a healthier, more content workforce, as well as helping to eliminate the huge injustice of in-work poverty.”