UK employees are facing a financial battle on three fronts, with rising living costs and escalating debt leading to insufficient saving, according to
UK employees are facing a financial battle on three fronts, with rising living costs and escalating debt leading to insufficient saving, according to research released today by Thomsons Online Benefits.
Against a backdrop of economic uncertainty, the survey of 2,000 UK workers found that the rising cost of living is a key concern for many. For example:
- One in four people (26%) are concerned about rising energy bills
- One in five are worried about rising food costs (19%)
- One in five are worried about rent or mortgages (21%), climbing to 28% among 18-34-year-olds
The findings come at a time when many UK employees are grappling with debt. The TUC estimates that unsecured debt per household rose to £15,880 in the first quarter of 2019.1 Thomsons’ research shows that eliminating this is now the number one short-term financial goal for employees (23%). But despite this, 71% of those who are seeking to pay off debt are continuing to try and save every month.
However, employers are struggling to support their people in achieving this. A recent report from charity, Business in the Community, found employers need more guidance on creating benefits schemes that support the financial needs of their workforce.2
Jack Curzon, Consulting Director at Thomsons Online Benefits comments; “We’re seeing a concerning rise in the number of employees accruing debt but simultaneously also putting aside savings. This is a false economy that people need to avoid and change their habits. Employers – and their people – really need to view achieving financial wellness as a three-step ladder, where they move from clearing debt, to short-term saving, to long-term financial stability and investments. To effectively support this, employers need to offer a suite of solutions, that help people at every stage.”
According to the research, employees are saving significantly less than the recommended 20% of their monthly salary needed to protect against current and future expenses:
- On average, UK employees save just 12% of their wages, with one in five saving 5% or less each month
- 13% admitted to saving nothing at all – with women disproportionately affected; 18% are unable to save compared to just 9% of men
- When asked how they’d spend a £1,000 cash gift, 38% said they’d save it – the most popular answer
Despite this, less than a third (27%) of employers provide flexible workplace savings solutions.
Jack Curzon comments; “Employers need to do their bit to put saving on a par with spending in the UK. Over recent years, the rise of online shopping, combined with increasingly accessible credit, has made it very easy for people to dispense of their cash. Advancements in benefits technology are countering this, and there are now numerous savings solutions on the market that employees could access via a workplace portal. However, employers cannot rely on product or provider-led solutions alone. HR professionals need to introduce support from a strategic level, that empowers people to make good financial decisions and helps them to change their spending habits for good.”