More than four in 10 employees have suffered a financial shock over the past two years such as a cut in hours, significant medical expenses or being a victim of fraud, according to Willis Towers Watson’s (WTW) financial wellbeing report.
The study of more than 4,000 UK employees found a third of UK workers (36%) were living month-to-month without any spare cash for emergencies or shocks, with a quarter (26%) struggling financially.
For those who have suffered a financial shock, around a third were unable to pay their mortgage, rent or utility bills (34%); a similar number expected to retire later than was anticipated a year ago (33%); or took a salary advance (29%).
In addition, a link between finances and mental health was highlighted as those struggling financially were three times more likely to suffer anxiety or depression (68%) than those who were financially unworried.
The research is part of the firm’s Global Benefits Attitudes Study and found indications that those living payday to payday had unhealthier lifestyles.
They were twice as likely to smoke (31%), have poor eating habits (37%) and drink too much alcohol (26%), and were 10 times more likely to substance abuse (19%) than those not living payday to payday.
In response to financial challenges, employees appeared to be turning to their employer to help them manage their financial wellbeing.
Two in five (42%) employees said financial apps and tools should be a core part of employee benefits and 39% said they trusted financial apps, tools and advisers that were suggested by their employer more than those they could find on their own.
Encouragingly, most (52%) financially struggling employees thought the resources and initiatives provided by their employer had helped to improve their financial situation.
Stewart Patterson, director for LifeSight, WTW’s DC master trust, noted that it was clear that for many workers, despite being in full-time paid employment, meeting day-to-day financial demands was a challenge.
“This can put pressure on people’s personal lives, which in turn can affect their performance at work, as well as their mental and physical health,” he said.
“We know that financial problems are strongly connected to other issues including anxiety, health problems, loneliness and lower performance at work, and so many employers are looking at ways to ease the burden on their employees.
“This can include tools and support designed to help with budgeting and financial planning, as well as flexible ways in which employee benefit budgets can be used to help those struggling in the short term.”
“There is greater appreciation from employees with financial difficulties that their employer recognises the financial challenges faced by some in the workforce and the impact this can have, and that employers are trying to provide help in this area,” he added.