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Paul Barrett
Head of Wellbeing
Paul Barrett

Financial wellbeing ….the missing piece in the employee wellbeing picture

Authors: Paul Barrett

20 January 2016

“Lack of money is the root of all evil,” said Mark Twain in one of his most celebrated bon mots. Well over a century later financial concerns remain a major issue for millions of people in the UK. Figures from Step Change Debt Charity illuminate the scale of the problem, suggesting 15 million people are falling behind on bills and using credit to pay for essentials. The knock-on effect for the health of people in debt is also serious. CAB found that 79% of people with debt were losing sleep most nights and 74% said it was affecting their mental health. Moreover many of these people are in employment. In 2013 we learnt from the Joseph Rowntree Foundation that for the first time, in-work poverty exceeded out of work poverty. This doesn’t surprise me, nor do the figures on the health consequences. At the Bank Workers Charity, we see the distressing impact of employees’ financial difficulties on a daily basis, observing how frequently they spill over to affect other areas of their wellbeing, especially psychologically in the form of anxiety and depression.

What I do find surprising is that only a minority of businesses are making education and support on financial issues available to employees. It’s a smaller minority still who are making serious efforts to incorporate financial wellbeing into their employee wellbeing strategies. In 2009 only 23% of businesses offered financial guidance to employees . In the intervening years despite innumerable articles in the HR and mainstream press calling for higher levels of financial literacy among workers, the figure has risen to just 30%.

Yet there’s no shortage of information out there highlighting why the financial wellbeing of employees deserves attention. In 2015 a Scottish Widows survey of UK workers found that more than one in five people with savings said they wouldn’t last longer than a couple of months if they were unable to work. When Barclays surveyed 2000 employees the findings were equally stark. 46% worried about their finances, almost 1 in 5 lost sleep as a result of money problems and 20% said that their financial difficulties were affecting their work.

Perhaps most tellingly from a business perspective, Barclays found that poor levels of financial wellbeing were associated with low levels of engagement and reduced productivity. Discretionary effort was 5 times lower among those with financial worries. Indeed overall they found that poor financial wellbeing reduced organizational productivity by 4%. Conversely, another report suggests that improving employee’ s financial wellbeing brings benefits across a whole range of business imperatives, translating into higher levels of organisational commitment and morale, lower sickness absence and increased productivity.

So the financial wellbeing of the workforce really is something organisations should be attending to. When employee wellbeing as a whole is gaining traction in the boardroom and when the data is out there, why aren’t more businesses prioritising financial wellbeing?

When I have raised this question, one of the responses I have received is that there are surely issues, and employee’s financial concerns presumably fall into this category, that lie outside the employer’s remit - that it’s not appropriate for businesses to intrude into the private lives of their people. To an extent this view is understandable, particularly as money matters are among the most sensitive issues in people’s lives; many feel uncomfortable about discussing their financial struggles, particularly in the workplace. On the other hand 25 years ago no-one would have expected employers to be providing support to employees over other deeply private concerns, such as personal relationship breakdown or bereavement, yet these are bread and butter issues for the EAPs that are now a common feature of the employment landscape. And why is this support available? It’s because businesses recognise that without timely support employees will struggle at work as well as at home. Surely this argument is just as relevant when employees are experiencing financial problems.

The fact is that the need for employee financial literacy is already great and is only going to become more pressing. The recently introduced pension reforms mean that employees are faced with a new set of options round which they really need to be making informed choices, if they’re to avoid problems in the future. Many employees claim in-work benefits but the introduction of Universal Credit brings changes to the frequency of payments that will make new demands on their money management skills. And in a nation carrying unprecedented levels of household debt, employees existing financial worries aren’t going to go away.

I don’t want to be overly pessimistic, as there are positive signs. Some forward-thinking companies are tackling the issue strategically. Anglia Water is a well-publicised example, with an integrated approach that incorporates a loyalty savings scheme, a financial education programme and on-site banking services. Barclays as well as addressing the issue at a strategic level, has actively encouraged other organisations to follow suit. They describe financial wellbeing as “an overlooked but crucial part of employee wellbeing”. And this is my point. I believe there is an unarguable case for making financial wellbeing central to any employee wellbeing strategy. It ought to sit alongside mental, physical and social wellbeing on an equal footing and with comparable organisational resource behind it.

Barclays have referred to financial wellbeing as “the last workplace taboo”. I have watched at first hand, as organisations in the banking sector have made great strides in tackling another historic workplace taboo -mental health. They have begun to change the way mental health problems are managed in the workplace and they have done so by making it a strategic priority. There is no reason why a similarly strategic approach to financial wellbeing couldn’t be extremely successful. All the evidence is that employees want their employers to provide financial guidance. 75% of employees say they would value more support from their employer around financial planning. The appetite is there and as organisations are beginning to take a more holistic approach to employee wellbeing, we’ll hopefully see more businesses make financial wellbeing a cornerstone of their wellbeing strategies.