BLOG: Financial inclusion - does it matter for employers?

May 16, 2016

We pride ourselves in the UK in being a global hub of financial services.  Yet almost two million of our fellow citizens don’t even have a bank account and a quarter don’t have home insurance.  It gets worse:  13 million people don’t have enough savings to support them for a month if they were to experience a 25% drop in income.  The loss of a job, family breakdown, an illness in the family – any one of these could tip them over the edge to join the 9 million who are already seriously in debt. Not surprising then nearly one in three of the adult population, most of them employees, report one or more signs of financial distress, according to the independent Financial Inclusion Commission. 

Those directly affected pay a heavy price.  People left outside the financial system –unable to access deals on line or pay by direct debit – are reckoned to pay a ‘poverty premium of £1,300 a year in extra costs.  Some pay much more.  And the penalty in terms of physical and mental distress, pressures on family relationships and potential loss of work is considerable.

It’s not only those directly affected that pay the price: all of us do.  As a recent report by the policy Think Tank Social Market Foundation commissioned by Neyber found,  the stress associated with money worries has a profound impact at the workplace.  Four in ten workers, according to this research, experience at least one form of stress that could reduce productivity: a lack of concentration, being less careful, time off due to illness or depression.  One in eight workers say money worries have affected their ability to concentrate at work and one in 20 workers have missed work in the last year due to money worries.  Research by Barclay’s suggests that absenteeism and presenteeism as a result of financial distress is adding an extra 4% to payroll costs for firms.

That’s one of the reasons why Britain’s productivity is so pitifully low, leaving us 25% less productive than the major economies we compete with.  In an increasingly competitive world, low productivity is a luxury we can ill-afford. 

So employers have a real incentive to do what they can to increase their staff’s sense of well-being, and at the heart of this is for people to feel in control of their money- rather than being controlled by it.   Very often people find they are trying to make ends meet by taking out high cost credit: payday loans, maxing out on the credit cards or running into overdraft – all of which can be eye-wateringly expensive.  And then they have to worry about how they pay it off.

If employers can help their staff to access affordable credit, through the sort of payroll loans that Neyber provides, helping them to manage their money and increasing their spending power by cutting loan costs, their staff will be a less stressed at work and healthier – and so will the company bottom-line. 

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