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Poor wellbeing could be costing the UK economy over £4 bn a year - LCP

Pensions & benefits Financial wellbeing DC pensions

LCP says that poor wellbeing could be leaving UK PLC with a hefty £4 bn bill every year based on the results of their latest survey into financial wellbeing across the UK workforce.

Their survey, of 10,000 employees, highlights that 26% of employees took time off work in the last year due to wellbeing issues – and on, average, they each took 2.7 days. Extrapolating this across the UK’s employed workforce suggests that 23 million working days are lost each year, at a total cost of more than £4 billion – an eye watering bill for UK PLC.

LCP’s ‘Employee Wellbeing: The changing dynamics of financial health’, gives an up to date snapshot of employee finances and attitudes to savings following the upheaval of Covid-19 and the resulting lockdowns.

The survey reveals the strain that Covid-19 has put on workplace relations, with almost half of those surveyed (46%) saying they didn’t have confidence going forward in their employer and 44% saying they didn’t feel secure in their job.

The survey gives a snapshot of how Covid-19 has impacted financial wellbeing:

  • Employees in London saw the largest impact on their personal income, with 1 in 3 negatively impacted, whilst the North East of England saw the smallest impact with 1 in 5 saying their personal income had been negatively impacted;
  • On average, 1 in 4 employees (25%) feel concerned and negative about their finances and can’t cope in the last couple of days before pay-day;
  • 3 in 5 employees said their ability to save had been changed by Covid-19. 24% said they were saving more, whereas 38% said they were able to save less;
  • The three biggest employee concerns for 2021 were the health of loved ones, finances and social distancing and pandemic restrictions.

On savings, the survey uncovered some interesting trends:

  • More than 2 in 5 (46%) said they didn’t feel in control of their financial future with 27% saying they were not currently saving. This was highest at almost 39% in the 16-24 age bracket.
  • Of those earning £30-£60k, 1 in 3 employees had savings of less than a month’s salary – that’s probably not enough of a financial buffer to meet emergency costs.

The survey also highlights how financial worries and mental health issues are impacting the younger generations in the workplace more. Those in the young and mid-career age bracket (16-34) were more likely to feel that financial concerns affect their behaviour at work and ability to do their job (49%). Around 30% in this age bracket said they were unhappy with their career and personal development and nearly 36% said they were unhappy with their mental health.

Heidi Allan, Financial Wellbeing Senior Consultant at LCP, commented: “Our findings highlight the enormous toll that the pandemic has taken on mental, physical and financial wellbeing. With the economic impacts of Covid-19 still yet to fully play out, it’s clear that the ‘anxiety peak’ has yet to be reached. While businesses have a lot on their agenda as they try and stay resilient in the face of financial pressures, there is a clear link between worry, uncertainty, poor performance, absence and sickness levels at work amongst employee which has a direct impact on bottom line costs.

Understanding and listening to employees, the concerns they have and what help they need is the first step that businesses should take to develop an effective programme around financial education and wellbeing. Ultimately, this will make a real difference to their employees lives as well as saving money and keeping the workforce engaged.”

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