Britain currently has the lowest rates of unemployment seen in the country in 40 years but despite this, there’s mass financial stress. Many workers find it hard to get from one payday to the next, running out of money for essentials mid-month.
The “Workplace Well-being Study” carried out research into the finances of the nation and the conclusion was that workers everywhere are feeling the effects of financial stress.
Resilience of UK Workers
If you’ve run out of money and need more cash to get through the month, where would you turn for help? Very few workers said that they would ask for an advance on their salary with close to half of employees, 43%, feeling uncomfortable about doing so.
Instead of requesting an advance on their salary, Brits prefer to use credit to ease cash-flow problems. More than three-quarters – 78% – said they’d use payday loans, credit cards or unauthorised overdrafts to get through to payday.
Why is there Such a Problem?
If employment rates are high, why is there such a problem with money – is it due to extravagant habits or frivolous spending? The study revealed that it’s nothing of the sort.
The heads of FTSE 100 companies gave themselves an 11% pay rise on average, but regular workers didn’t fare so well over the same period. With an average pay rise of just 2%, wages haven’t even kept pace with the rate of inflation.
This means that even those workers who have full-time employment are experiencing a drop in their income in real terms. This is a major contributing factor to the struggle that many face.
The Effects of Financial Stress
Having established that workers are being stretched financially, what exactly are the effects of such stress?
The reliance on credit creates a debt cycle, which can make it difficult to carry out long term financial planning. Those earning less than £20,000 were found to be at particular risk. After debt levels in the UK rocketed by 10% between 2016 and 2017, the regulator warned that the situation is a “time bomb”.
The worry about being able to repay these debts takes a heavy toll on workers. Some of the negative effects that workers have experienced which are directly due to financial worry include:
• Relationship breakdown
• Decline in social life
• Physical illness
• Difficulty concentrating
Although the study looked at how stretched finances affected workers, there is an inevitable knock-on effect for employers too. Employees who are exhausted and can’t concentrate won’t perform well, with lower productivity levels and more mistakes.
A Way Forward?
The only way to combat these ongoing problems is for all the workers in the UK to receive a living wage which is relative to the cost of everyday life. This would not only ease the financial stress on workers as well as the reliance on credit, but employers would see an upturn in performance too.