Almost a third (31 percent) of workers have admitted that money worries had negatively affected their work performance.
A survey of around 5,000 employees, conducted in February 2025 and commissioned for the CIPD Good Work Index, showed that nearly two-fifths (37 percent) of employees earning less than £40,000 a year reported that financial worries had hit their work performance. The research found that 22 percent of people earning £60,000 and above said the same.
Almost a fifth (19 percent) of survey respondents said that concerns about money had caused them to lose sleep, 15 percent said it had caused health problems such as stress, and 13 percent said financial worries made it hard for them to concentrate or make decisions at work.
The CIPD research found that young workers and people earning less than £40,000 were most likely to report an impact on their health and work performance.
Three in ten (30 percent) employees reported that the state of their finances meant they would not be able to manage an unexpected £300 bill. This rose to 52 percent among employees earning less than £20,000 a year.
The research found this precarious situation was faced by 43 percent of hospitality sector workers and 41 percent in retail.
The survey took place before the USA introduced controversial trade tariffs, which are expected to cause greater global economic uncertainty and push the cost of living even higher.
In addition to concerns about the inability to pay for unexpected bills, most people working in retail and hospitality told the survey they do not think their pay is enough to help them save for retirement.
Among people earning less than £20,000 a year, just 35 percent said they are keeping up with their bills and credit commitments without any issues. The CIPD said that this is essentially the same as reported in 2024, despite the 9.8 percent increase in the national living wage in April 2024.
What can employers do?
The CIPD said that employers “face a tricky balancing act” because while employees have been hit with increases in energy, council tax and other bills this month, businesses also face rises in employer national insurance, the minimum wage, and other costs.
However, in light of the damage that poor financial wellbeing can wreak on employee health and productivity, the CIPD urged employers to “think and act strategically”.
In practice this could cover a raft of actions, from ensuring the organisation’s pay outcomes and processes are fair, to ensuring that employees at the bottom of the wage scale earn enough to live on, as well as highlighting useful sources of financial information, such as the Money Advice Service.
The employer body encouraged employers to create a financial wellbeing strategy that supports the organisation’s overall health and wellbeing strategy, and vice versa. It said that such a strategy should include offering financial education and benefit communication programmes to raise employee awareness of their financial options, and how to make the most from them.
Employers could help employees make their take home pay go further by providing staff benefits, either directly or through a voluntary benefits scheme, the CIPD said. To do this, HR can help the business explore which benefits suit the needs of the workforce, then investigate whether these can be offered flexibly so people can select those that work best for them.
The provision of workplace hardship loans, access to debt counselling, or earned wage access, can also support employees that find themselves in financial difficulty. Support to reduce the risk of employees falling into financial difficulties in the first place are also important. This could take the form of an employer provided payroll saving scheme, which would help people build up a fund for financial emergencies, or occupational sick pay so people do not face a financial crisis if they are off work sick.
The CIPD also advocated for ongoing investment in people management capabilities to help boost workforce productivity, which in turn would make pay rises more affordable, it said.
“By creating and then communicating a financial wellbeing strategy, employers can stand out in the labour market,” the employer body said.
Previous CIPD research revealed that 59 percent of staff believe it is important that their present employer has a policy to support and improve their financial wellbeing. When it comes to looking for their next job, 65 percent reported that it is important to them that a future employer does this. This shows there is a strong business case for investing in the financial wellbeing of workers, the CIPD said.
Charles Cotton, senior policy adviser for reward and performance at the CIPD, told Benefits Expert: “The first thing employers should do is to recognise that these cost increases could impact on the financial wellbeing of their employees, and this could then affect their performance. Workplaces should flag the support that is already on offer both inside and outside the organisation and encourage those with money problems to come forward now, before their financial troubles become even larger.”
He added: “To help prevent employees getting into financial difficulties in the first place, employers should explore helping them to save for a financial emergency. This could be done through a payroll saving scheme, where workers set aside a small amount of money each month from their pay cheque, this allows them to build up a financial buffer to help them deal with an unexpected expense.”
For more on workplace savings schemes, check out the Benefits Expert Guide to Helping Employees Save 2025.
