News

One in twenty workers could not cover costs if they lost their main income, poll finds



One in 20 employees would not be able to afford their living costs for a week if they lost their main source of income, research warns.

One in six (15 per cent) of respondents would not be able to survive a month without pay, while 5 per cent would not last a week, data collected by the Building Societies Association (BSA) shows.

More than six in 10 of the over 2,000 adults surveyed by the body who are employed described their bills and credit commitments as a “burden”.

Some 27 per cent of employees generally said that money worries have affected their ability to do their job. That proportion rises to 55 per cent for those who would not be able to cover their living expenses for a month if they lost their income, and 63 per cent of those who find bills and credit commitments a heavy burden.

Nearly two-thirds (62 per cent) of workers say that employers should care about their financial wellbeing, but only just under a quarter (24 per cent) think their employer actually does.

This so-called “financial wellbeing gap” is particularly likely to be significant for employees working in larger organisations; those in media, marketing, PR sales and education; younger employees; and those with low financial resilience.

The survey’s findings come amid warnings from the OECD that the UK economy will slow to a standstill next year as it suffers more than other major economies from inflation.

Of the people surveyed for the BSA’s report, the majority were private sector employees ranked as middle managers or below, working in businesses with two or more employees.

The BSA acknowledged that people will not be able to save any money in the coming months amid the cost-of-living squeeze.

But it said that introducing a workplace savings scheme for those who are in work, and do feel able to save a little each month, could be one way for employers to help staff improve their longer-term financial wellbeing.

Such schemes could allow participating employees to have a set amount taken from their monthly wages after tax, to be placed in cash savings, which could be used for an emergency or a treat.

Half of employees (50 per cent) surveyed who are not currently offered workplace savings would be interested in joining, the BSA found. Of those whose money worries have affected their work, six in 10 (60 per cent) would be interested in a workplace savings scheme if this was offered to them.

For one in eight (13p per cent) people interested in taking part in a workplace savings scheme, it would be their first formal cash savings.

Several building societies are actively exploring how they can help in this area, the BSA said, with some credit unions and building societies already offering this type of account.

Financial Inclusion Minister Guy Opperman said: “Workplace savings can play an important role in helping people to build their future financial resilience.

“It’s good to see that many credit unions and some building societies have schemes in place for employers to support people to save direct from their salary, but we now need to grow the number of providers and encourage employers to take advantage of these services to support their staff.”

Sarah Porretta, propositions, insights and external engagement executive director, Money and Pensions Service, welcomed the BSA’s work “to raise the profile of workplace savings, which could provide financial resilience and security to many people in these uncertain times”.

Andrew Gall, head of savings at the BSA, said: “As food, energy and other prices continue to rise, it is no wonder that so many are now finding their finances stretched and are struggling with their day-to-day living costs.

“Although now won’t be the right time for many to start saving, introducing a workplace savings scheme could provide an opportunity for some to start building a savings buffer, in a simple and flexible way.

“Having a scheme in place will also help other employees who can join the scheme and start regular savings when their own personal situation allows, helping them to increase their resilience for unexpected financial shocks in the longer term.

“For those who currently have outstanding debts such as personal loans or credit cards, we’d suggest that, if they can put a little extra aside each month, they use it to reduce these before putting into savings account, as interest will be charged on the outstanding amounts.”

Additional reporting from newswires.

Source link

Leave a Reply

Your email address will not be published.