The study

Carried out in partnership between the Social Market Foundation and Neyber, the report analyses data from Understanding Society, the British Household Panel Survey and two smaller surveys to examine the extent and effect of financial problems and worry on the productivity of the British workforce before considering potential approaches employers might take to combat the problem.

Analysis in the study is based on data gathered by:

• Understanding Society (Waves 4 and 5) and its predecessor the British Household Panel Survey, offering a sample of up to 27,000 people in employment
• A 2015 online Opinion survey of 5,053 people, weighted to be representative of all GB adults over 18 and in work, conducted for Neyber
• A 2015 YouGov survey of 8.870 people, weighted to be representative of all GB adults over 18 and in work, conducted for Neyber

Key findings

• In 2016 the UK economy’s productivity levels were up to 25% lower than those of other major economies. Job satisfaction and employee engagement can help to increase overall productivity levels.
• 40% of workers reported experiencing stress levels that could reduce productivity.
• Low financial capability and resilience contribute to this, with one in 12 workers reporting financial difficulties and a quarter “just about managing”. The level of reported financial difficulty almost doubled in the decade to 2013/14.
• Four in ten workers reported stress from money worries over the previous year, with 25% losing sleep, 13% losing concentration at work and 6% missing work.
• Low financial capability and resilience affected many workers, even among the well-paid. 48% did not put money aside for anything other than regular bills, while 29% had no savings or investments at all.

Discussion

• Addressing wider productivity issues can be complex and expensive, particularly for smaller employers.
• Employers have an inextricable link to the financial well-being of their staff and so are well-placed to promote financial capability and resilience.
• They already have responsibility for pension provision and so could consider offering training programmes or access to independent financial advice or suitable savings and debt products.
• Auto-enrolment in pension schemes is an existing approach that might be extended to savings, but like pensions this could be a blunt instrument that overrides individual decision-making and might not respond well to individual circumstances. Nevertheless, it might be worth considering given the scale of the savings shortfall among workers in general.
• Enrolment into income protection plans may be easier but would probably need to be piloted by large employers.
• 53% of workers would welcome their employers giving them access to affordable loans and savings products.
• Financial mutuals, such as building societies and credit unions, enjoy a higher level of trust than commercial banks and have often been founded on bonds of geography or occupation. As financial arrangements are increasingly complex, there may be scope for employers to offer access to and advice about such products.
• The government could consider how to make such tax-advantaged savings arrangements available to all workers, perhaps via payroll schemes.
• Offering access to financial advice is likely to be easier and 46% of workers would like their employer to offer such services. Simple steps might include adding advice about recommended levels of saving to payslips or giving workplace access to online money management tools.

Points to consider

• While analysis of data is robust, the discussion reflects the specific priorities of the sponsoring agencies, so other solutions might be considered.

Full report

Working well - full report