YBS's workplace savings report reveals money worries cost the UK economy up to £51bn a year
- UK workers’ poor financial well-being is having a significant impact on productivity
- Savings as a proportion of income is the lowest it has been for nearly 60 years1
- 40% (13 million) of employees worry about money all the time and 23% (7.5 million) don’t save at all
- Addressing poor financial well-being in the UK’s workforce could boost GDP by 2.4% a year through increased productivity
- Report recommends that Government and employers should be encouraged to treat employees’ financial health in the same way as physical and mental wellbeing
- Research forms part of Yorkshire Building Society ambition to help 1.8m more people to save by 2024
Worries over money among UK workers are costing the economy up to £51bn a year in lost productivity and recruitment expenses2, a joint report from the Yorkshire Building Society and Salary Finance has found.
Stress over personal finances make employees significantly less productive, unable to finish daily work tasks and more likely to change jobs, analysis by the two businesses has found.
The report, which has been endorsed by debt solutions charity StepChange, estimates this impact on productivity costs employers the equivalent of 13% to 17% of their total payroll. This collectively costs UK businesses between £39bn and £51bn per year, equivalent to between 1.8% and 2.4% of the UK’s Gross Domestic Product (GDP).
Two in five UK employees (40%) worry about their finances and the UK’s saving to income ratio is at its lowest level since 19631. To combat this, Yorkshire Building Society and Salary Finance want the Government and employers to treat financial well-being on a par with physical and mental well-being by providing support and schemes where employees can save directly from their salaries.
The report shows that saving and financial education are vital to financial resilience and calculates that if just 5% more employees a year start saving, by 2024 an additional 1.8 million would be savers. This would represent a 24% decrease on 7.5 million employees that currently have no savings.
Workplace schemes are an effective way to help people save. More than a quarter (28%) with workplace savings schemes said they have no other regular short or medium‐term savings and two out of five (40%) would simply spend the money if they didn’t save it from their salary.
Mike Regnier, Yorkshire Building Society’s Chief Executive, said:
The economic impact of financial insecurity cannot be overstated. We’re a nation of spenders, not savers, as a result of the everyday challenges that can reduce our ability to manage our money.
This doesn’t just cause problems with meeting unexpected bills or loss of income due to sickness or unemployment. Money worries can affect all aspects of peoples’ lives.
As well as the personal cost, employers are affected too. Employees with money worries could cost UK employers up to an estimated £51bn a year.
Over the next five years, we want to help an additional 1.8 million workers who aren’t saving to start putting away money. This will benefit everyone because increasing the nation’s financial resilience has clear benefits for the economy and for employers.
We need to make the right solutions available to employees and help them to access financial support and resources in the workplace which will build a financially resilient workforce.
Asesh Sarkar, CEO of Salary Finance said:
We are passionate about the role that employers can play in helping staff get their finances in shape. We know from the research we carried out that 77% of employees trust their employer to keep their personal financial situation private from their colleagues.
Employers are in a unique position to provide support, through financial education, salary-deducted savings and loans, to help employees increase their financial fitness and ultimately improve their financial wellbeing. The added dividend for businesses comes in the form of a happier, healthier and more productive workforce.
StepChange Debt Charity
Richard Lane, Director of External Affairs at StepChange Debt Charity, said:
Helping households to build better financial resilience needs to become a firmly embedded goal not just for policymakers but for all of us. When people turn to StepChange Debt Charity for debt advice, 98% of them have no savings whatsoever. We've long called for realistic mechanisms to enable more households to save – and in previous research have estimated that if every household in Britain had £1,000 in accessible savings, this would reduce the number of people in problem debt by half a million.
Last year, the National Audit Office pointed to the costs of problem debt to the public purse – including its direct knock-on impacts on the NHS budget and the housing budget. And a survey we commissioned at the start of the year revealed that more than a quarter of us (27%) started the New Year feeling uneasy about our finances. The Help to Save scheme provides a welcome step in the right direction but not everyone is eligible to use it, or can afford to.
To find out more and to read the full report visit www.ybs.co.uk/media-centre/getting-britain-saving/
All information correct at time of publication.
1 Source: Office of National Statistics, Household Savings Ratio: 3.8% 2018, Q3 compared with 3.6 1963, Q2.
2 Figure is based on national payroll calculated through average salaries and estimates. Cost to economy includes reduction in productivity of employees with financial worries, calculated through average days lost in unfinished tasks and poorer work quality, and additional recruitment costs.