The UK’s lowest-paid are facing severe financial struggles and need more workplace support, a new report has highlighted.
Entitled Life on Low Pay, the Living Wage Foundation’s survey found that half (50%) of respondents are worse off than a year ago.
The research, carried out among 2,000 workers earning less than the living wage, revealed that three in five (60%) have used a food bank in the past year. Nearly two in five (39%) have regularly skipped meals and the same number have fallen behind with their bills.
Polled by Survation, the study further showed that almost one in three (32%) low-paid workers hadn’t been unable to heat their homes due to their financial state, while more than one in four (27%) had fallen behind on mortgage or rental payments. One in five (21%) had turned to a payday loan to cover the cost of essentials.
Commenting on the findings, Katherine Chapman, director of the Living Wage Foundation, insisted more needs to be done to protect the lowest-paid workers.
She said: “After more than a year of record price rises, we are finally starting to see inflation ease. But today’s research shows that the cost-of-living crisis is far from over, especially for the 3.5 million workers who are paid less than the real living wage.”
Financial struggles caused by low earnings were also found to be continuing to impact people’s health, with more than half (52%) of respondents reporting a negative effect on their mental state.
One in two (50%) said their pay rate had worsened their overall quality of life, while nearly two in five (39%) claimed it had worsened their relationships with family and friends.
Sam Lathey, CEO of financial wellbeing platform Bippit, believes there are many actions that employers can take to ease the pressures faced by the lowest paid.
He said: “Unfortunately, lower-paid workers often experience a perfect storm of factors that lead to unstable financial wellbeing. Aside from paying them fairly, employers should ensure the workplace is not negatively affecting their financial wellbeing. Expenses should be paid as quickly as possible so people don’t run out of money. It’s also helpful if employees are facilitated to be flexible in picking and swapping shifts. This allows parents, for example, to better avoid costs associated with rigid work, such as emergency childcare.”
Lathey explained that employers should empower individuals to develop and nurture their financial wellbeing, both in terms of principles and skills such as budgeting, as well as their relationship with money.
He added: “People under financial pressure often find it hard to make necessary decisions to protect their financial position, but these decisions can be easier to make with better knowledge and confidence, as well as a healthier relationship with money.
“Personalised financial guidance is one of the best ways to empower employees in this way, because it takes into account their unique situation. This is in contrast to generic education, which can often be too generalised for employees to find useful enough to turn into positive action.”
According to Chieu Cao, CEO of Mintago, employers also need to create a culture of financial wellbeing to ensure those on low incomes are well supported.
He said: “The first step to creating a culture of financial wellbeing is identifying what concerns employees have by proactively and sensitively starting a dialogue on their finances. This can be done, for example, through one-on-one interviews with HR personnel or online questionnaires – but importantly, in whichever communication style the employee feels most comfortable with. Once specific concerns are identified, employers will be better equipped to share the best tools to support employees in achieving their financial goals.
“The quality of the support itself is equally important to building employee trust and a financially open culture. Unique financial needs and preferences mean there is no one cure-all solution that will suffice. Employers must deploy robust, impactful financial wellbeing solutions that can cater to each individual’s needs, such as a comprehensive financial wellbeing platform that would allow them to get to grips with different aspects of their financial lives.”
