New warnings over work as financial anxiety spreads

A third of millennials say worrying about money is impacting their professional lives, as the mass return to work puts greater pressure on already fragile budgets, writes Kate Hughes

(iStock/The Independent)

Financial anxiety is now holding a third of young employees back at work, even as the return to the office threatens to bring yet more money shocks to the UK’s labour force.

Young adults, facing more insecure working circumstances than before the pandemic, as well as rising interest rates on debts, higher rents, fuel, utility and other everyday bills report far higher levels of this kind of economic stress than their older colleagues.

Fewer than one in 10 employees over the age of 55 report the same concerns, according to data from financial wellbeing firm Mintago.

But with the wider effects of financial anxiety among staff ranging from poor relationships with colleagues and a drop in productivity to higher instances of absenteeism, campaigners have renewed calls for bosses to help battle the rising cost of living but even being back in an office is throwing up new financial challenges.

“With Covid and the cost of living crisis impacting the incomes of people across the country, helping restore employees’ financial wellbeing should be at the top of organisations’ to-do lists,” says Sue Anderson, head of media at the debt charity StepChange.

But half of UK employers still have no formal policy on financial wellbeing, increasing to almost two-thirds of those in traditionally lower-paid sectors, many of which have been disproportionately affected over the last two years.

“Over half of those coming to StepChange last year were either employed or had a partner in employment, so it’s evident that work does not always signal financial security,” Anderson adds.

“Effective financial wellbeing strategies can range from help with creating budgets to hosting workshops on effective management of finances. Firms should also work with employees to ensure, if they are struggling, that they are signposted to more long term ways of addressing financial issues, such as free debt advice.”

The warnings come as the Office for National Statistics (ONS) this week revealed comprehensive details of how the nation worked and spent during the pandemic, including the badly understood costs and savings surrounding that largely home-based work.

“The cost-of-living crisis is going to hit even harder when we go back into the workplace,” says Sarah Coles, senior personal finance analyst for Hargreaves Lansdown.

“About one in three people were working from home at least one day a week in late January, which has cushioned the blow of some price rises. Around half of them have noticed their spending has dropped, but millions of people have no idea that homeworking could be saving them money, so they could be in for a nasty shock when they go back to the office.”

There are always some exceptions to the rule, but on average, it seems working from home is cheaper.

While heating a home to work in that would otherwise be allowed to cool hikes already runaway energy bills, saving on the commute, eating out, paying for a work wardrobe, and picking up impulse purchases means your savings outweigh your extra costs.

“It’s one reason why the more people who work at home, the less we spend on debit and credit cards,” Coles adds.

“When you ask people about their spending, only half of them say they’re spending less, and a fifth say they are spending more. This may be due to some people underestimating the cost of the commute.

Plus, home-related costs aren’t the only bills that are rampaging through our budgets, the ONS shows.

“While many people have been able to work from home, some of the costs of going to work have soared. Most strikingly, in the 12 months to December, petrol prices were up 27.8 per cent, while the price of some kinds of parking was up 26.1 per cent,” Coles notes.

“Meanwhile, local cafes and restaurants are trying to make up lost ground after two years of disruption, while wrestling with staff costs and shortages, so they’re having to put their prices up too.

But short-term financial management is only a small part of the role employers are being urged to embrace in a bid to relieve financial anxiety, not least because millions of workers already manage their long-term retirement savings through their workplace.

The rollout of the workplace pension has had a dramatic, positive effect on the nation’s pensions prospects, but employees are struggling to engage.

“An employer should not just auto-enrol staff in a workplace pension and then consider this box to be ticked,” says Chieu Cao, CEO of Mintago.

“Businesses must help employees to better understand their pension scheme, the benefits of saving and make it easier for employees to change their contributions. Improving access to financial information for employees, such as the size of their pension pots and how best to manage them, needs to be prioritised by organisations.

Doing so will benefit employees by putting their mind at ease and enhancing their overall wellbeing, Cao argues.

“It will put them in better control of their finances, and it will allow them to plan for their eventual retirement more effectively – something the majority of young people feel is daunting because they don’t know where to start.

“Ultimately, improving pension engagement will help to ease a major cause of stress within the workplace, creating a happier and healthier workforce.”