Category: news
Business owners, is poor financial wellbeing among your employees affecting operations?
Research suggests that many employees feel like they’re not receiving enough support to improve their financial wellbeing. It could affect business operations, and cost you money too.
Financial wellbeing isn’t just about income. It covers things like financial literacy, confidence, and having a good relationship with money. As an employer, you can do several things to help your staff feel more in control of their finances and future.
1 in 5 employees say their employer isn’t doing enough to support their financial wellbeing
Amid concerns about rising inflation, 19% of employees feel like their employer isn’t doing enough to support their financial wellbeing, according to CIPD research.
The report found:
- 1 in 8 employees say their pay is not enough to support an acceptable living without having to go into debt to pay for essentials like food and utility bills.
- 27% said their pay is not enough to cope with a £300 emergency.
- Less than half (47%) said their pay is enough to help save for retirement.
Worries about money and long-term financial security can affect mental health, which can affect your business’s performance too.
An Aegon white paper suggests that poor financial wellbeing among employees is costing UK employers £6.2 billion a year. This represents the cost of absenteeism and presenteeism due to financial anxiety.
45% of employees said that financial worries cause them to feel anxious, which led to them taking time off work or being distracted when they’re in the workplace.
Creating a financial wellbeing programme for your business could mean your employees are happier and more confident, which could boost your operations. It can also make your business more attractive when hiring talent in a competitive market.
6 practical steps you can take to support financial wellbeing among your employees
Investing in a financial wellbeing policy is worthwhile.
The CIPD research found that 81% of employees whose employer has a financial wellbeing policy said it’s important to them that any future employer has one in place, so it’s a valued step.
In addition, these employees were far more likely to say their employer does enough to support their financial wellbeing and provides a good level of benefits.
If it’s something you’d like to put in place, here are six steps you could take.
1. Schedule regular reviews and create progression plans
While salary isn’t the only thing that supports financial wellbeing, the research shows that it’s important to employees.
Having regular employee reviews where salary may be discussed can help employees bring up worries they may have and show how they’re providing value to the company through their performance. While you may not be able to meet all salary expectations and goals, being able to have a conversation can be useful.
Making a clear progression plan, which could lead to a salary increase, can also motivate employees and mean they have more confidence about their future.
2. Take the time to explain your workplace pension
The research found that many employees are worried they’re not doing enough to save for retirement.
As most employees benefit from being auto-enrolled into a pension, taking the time to explain how it works, including what you’re contributing, tax relief, and how it’s invested, can be valuable.
Some of your employees may not realise how much is going into their pension or understand how it’ll add up over their working life.
3. Effectively and regularly communicate the benefits you offer
If you offer employee benefits, make sure you show these off and regularly talk about them. Whether it’s a salary sacrifice scheme that can make childcare more affordable or discounts for high street stores, it can be easy for employees to forget about these perks.
Effectively communicating what you offer can highlight how you’re supporting their wellbeing and mean employees are more likely to make use of them.
4. Consider how you could support long-term financial wellbeing
As budgets tighten, many people are worried about how they’d cope if they faced a financial shock. You may already have policies in place to support employees if something happens.
For example, do you offer an enhanced sick pay policy, paid bereavement leave, or group life insurance? Benefits such as these can support long-term security and mean employees feel less worried about uncertainties in the future.
5. Signpost where employees can turn if they’re worried
At difficult times, when struggling with debt or managing their household budget, for example, your employees may benefit from seeking support.
Signposting where trusted advice can be found can be useful and provide someone for them to talk to if they’re not comfortable discussing concerns at work. StepChange can offer advice about managing debt, and many other charities can help people who are struggling.
6. Work with a finance professional to support your employees
If you’d like help creating a financial wellbeing programme to support your employees or want a finance professional to help them understand how they can get the most out of their income and assets, we could help. Please contact us to discuss your needs.
Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
Investment market update: May 2022
Investment markets in May experienced volatility amid concerns that economies could fall into a recession as inflation pressure remains high.
While you may be worried about the volatility your investments have experienced, keep your long-term goals in mind. A long-term time frame can help smooth out the peaks and troughs of markets. This is because, historically, markets have recovered when you look at the bigger picture.
UK
At the end of May, chancellor Rishi Sunak unveiled a package of measures designed to alleviate some of the cost-of-living challenges families are facing.
The £15 billion package will be paid through a levy on the profits of energy companies, known as a “windfall tax”. Among the measures introduced were one-off payments to vulnerable families and support to reduce energy bills for all households.
The measures were made after the latest inflation figures show that, on average, prices increased by 9% in April – the highest level since 1982.
This led to the Bank of England (BoE) raising its base interest rate for the third time this year to 1%. It’s the highest the base rate has been in 13 years after it was cut following the 2008 financial crisis.
Inflation is also affecting the value of salaries. Figures from the Office for National Statistics (ONS) found that regular pay, which excludes bonuses, increased by 4.2% in the three months to March. While this may seem positive at first, once inflation has been factored in, salaries have fallen in value in real terms.
Unsurprisingly, this is affecting consumer confidence.
A consumer confidence index from GfK suggests that sentiment levels have fallen to their lowest point since records began in 1974. The index measures how people view their personal finances and wider economic outlook.
However, according to Barclaycard, consumer card spending grew 18.1% in April when compared to the same period in 2019. After two years of cancelled holiday plans, the travel sector saw its best month since the pandemic.
From a business perspective, inflation is also affecting operations and confidence.
A report from S&P Global and CIPS found UK factories are facing price hikes. 85% of companies said their purchase prices have increased, while no firms reported a decrease. In addition, new order growth hit a 15-month low.
The poor demand has been linked to a range of factors, including ongoing lockdowns in China, the conflict in Ukraine, and Brexit.
As a result of these pressures, ONS figures show GDP fell by 0.1% in March, leading to concerns that the UK could fall into a recession in 2023.
Europe
The effect of the conflict in Ukraine and the inflation pressure it has led to is reflected in the European Commission (EC) downgrading its growth forecasts.
The EC now predicts real GDP growth in both the EU and eurozone of 2.7% for 2022. This compares to a previous forecast of 4% just three months earlier.
While the European Central Bank (ECB) didn’t make any changes to its base interest rate in May to control inflation, president of the ECB Christine Lagarde has indicated a rise will happen in July.
Data from Germany, the largest economy in the EU, demonstrates the challenges that many European countries are facing.
German producer prices have increased by 33.5% in the year to April, with energy prices surging by 87.3% to drive this increase. Some German businesses are also being directly affected by the conflict in Ukraine – exports to Russia have fallen by nearly two-thirds when compared to last year and are now at their lowest levels in almost two decades.
US
Inflation in the US almost reached a 40-year high in March, with prices rising 8.3% year-on-year. Once again, energy and food prices are driving this rise.
In response, the Federal Reserve raised its interest rate by 50 basis points to a 0.75% – 1% range. The organisation also noted that ongoing increases to the interest rate may be appropriate to try to get inflation under control.
While the University of Michigan’s index of consumer sentiment fell to its lowest level since 2011, data suggests that consumers aren’t cutting back their spending yet. The value of retail sales increased by 0.9% in April.
However, payroll data indicates that businesses are being more cautious than expected. In April, 247,000 new jobs were created, according to ADP. While the number of jobs is still growing, it’s significantly below the 390,000 expected.
US company Apple has lost the title of the world’s most valuable company. As oil prices soared, so too did the value of Saudi Arabia’s oil giant Saudi Aramco, which has now surpassed Apple.
Elon Musk’s bid to buy social media platform Twitter has also continued to make headlines. The $44 billion (£34.8 billion) deal is temporarily on hold as Musk is seeking details about spam and fake accounts. The news led to shares in the company falling by 10%.
Asia
China is also facing challenges as it continues to enforce ongoing lockdowns in certain areas.
The lockdowns, along with consumers cutting their spending – retail sales fell by 11.1% in April – and falling industrial production have slowed the economy’s growth. In turn, there are more unemployed people compared to a month earlier.
Like many other countries, China is battling rising inflation, which has been linked to currency weakness, and food and energy prices rising.
If you’d like to discuss your investment strategy or how events have affected your portfolio, please contact us.
Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.