In-work Poverty and Financial Wellbeing – how employers can help
Blog in collaboration with Emma Norledge at Wave Community Bank
When 42% of UK families have either no savings or less than £1,500 in savings (1), and 53% of employers are concerned about the impact of the economic environment on employees’ financial wellbeing (2), it’s time to face the truth that poor financial wellbeing is a big concern. And it can affect not only staff mental health but also businesses’ productivity and growth.
Did you know that unfortunately 39% of people on Universal Credits are in employment? The number of people on Universal Credit has nearly doubled since the beginning of the pandemic, and there is now a higher proportion of employed people on Universal Credit because their earnings are not enough to cover their living expenses (3).
The Chartered Institute of Personnel and Development (CIPD) has been raising awareness of in-work poverty and how employers can tackle this sad reality, being one of the actions to provide financial wellbeing support to their staff.
Here are some stark stats that show the reality of the impact of money worries on workers:
- 40% of people have reported making a mistake at work or losing concentration due to money worries (4).
- People with poor financial wellbeing are: 7 x more likely to be unproductive; 8 x more likely to produce lower standard of work and 4 x more likely to be completely disengaged with the business (5).
What’s even more concerning is that only 33% of workers think their employer is doing enough to support their financial wellbeing (6) – so now is the time for employers to look at the options available to them.
Partnering with a credit union could be a great solution. Wave Community Bank (WCB) is the credit union for East Sussex. WCB work with employers to offer their staff a savings scheme called Chorus so that employees can save and repay loans with WCB simply and easily directly through payroll.
Schemes like this are run by credit unions across the UK and over 200,000 workers are using them, with 96% of members saying they would recommend them to co-workers (7). As credit unions aim to turn borrowers into savers, all loans have a savings element to the repayments. These schemes benefit staff by offering them the chance to access savings direct from their wages, so that they can save before they start spending. Repaying loans through payroll is also beneficial because the loans often have lower interest rates.
A Case Study
31-year-old frontline worker, Jemma, from Eastbourne has a debt consolidation loan with WCB that she is repaying through payroll. Previously her debt repayments were £450 a month for a high-interest loan and credit card. She now pays £144 as a loan repayment each month and saves just under £30 into a linked savings account, all through WCB’s Chorus Workplace Scheme.
Jemma said: “My debt wasn’t the result of a frivolous lifestyle. I had borrowed to cover the cost of basics, including a car which I needed for my job. Interestingly, the more debt I had, the more credit I was offered by loan companies and credit cards, but the interest rates they charged would have meant getting stuck in a cycle of paying more and more interest without ever fully repaying what I owed. Wave’s approach is so much fairer, and having to set up a savings account at the same time as taking out a loan is a really good idea. I’m forecast to have saved just over £1,200 by the time my loan is repaid.”
As well as savings and loans through payroll, WCB offer financial wellbeing support to employees of their Employer Partners. Emma Norledge, Deputy CEO said: “We give our Employer Partners a lot of added value when they sign up to Chorus. We run free financial wellbeing webinars that people can join to find out how to improve their credit score and how to tackle debt. We also recently ran a highly attended webinar on Surviving the Cost of Living Crisis that one employer livestreamed to staff in common areas. We visit our employers sites and talk to their staff about money management, budgeting and what their staff can do to start saving. We work closely with our employers to find out the needs of their teams so we can tailor our support to help them.”
There is a lot of evidence showing that these schemes work to support staff with their money management and building a savings buffer to improve their financial resilience. 53% of workers without a payroll deduction scheme available showed interest in saving via this method (8). If you are interested in finding out more about partnering with Wave Community Bank to offer Chorus to your staff, please contact Emma Norledge at email@example.com.
Other Financial Wellbeing Support Services
There are other local financial wellbeing support services and benefits run in partnership with East Sussex County Council that you could signpost your staff to, in order to help them manage their finances and their living expenses:
- Keep Warm and Well
- East Sussex mental health directory
- Get advice about money
- Money, debt, and Mental Health
- Money and housing
- Financial help if you are sick or disabled
- Childcare costs
- Welfare benefits helpline
- Advice if you are homeless
- Community Transport
If you have any questions about any of the above services, please contact the Wellbeing at Work team at firstname.lastname@example.org. Please also use this email address to share with us any successful financial wellbeing initiative you have implemented in your workplace.
- (1) Family Resources Survey 20/21
- (2) (4) (5) (6) Elephant in the Workplace, Nudge
- (3) Universal Credit Statistics, 2013-2021
- (7) (8) Getting Workforces Saving: Payroll Deduction Schemes with Credit Unions