Speaking at a recent conference introducing Financial Capability Week, Charles Cotton, the CIPD’s performance and reward adviser, argued that employers bear the burden of responsibility when it comes to financial education and employees’ monetary health.
Cotton has expressed concern about people struggling to make ends meet, living hand to mouth and having little capability of managing their finances or saving for a rainy day. He has urged corporations of all sizes to consider investing time and money into ventures that aim to improve the financial wellbeing of their workforce and has endeavoured to demonstrate to businesses that financially secure, confident employees make for a more productive, creative workforce.
Conversely, people who are suffering from financial stress are less likely to make sound decisions, more likely to be absent from work, and generally be less productive and motivated. Even more worrying is that financial difficulties can lead to mental and even physical health problems. The CIPD has set out to prove that there is also a very sound business case for taking care of employees’ financial wellbeing and promoting financial literacy.
Cotton has suggested that organisations begin by looking at the bottom line. Are they paying their staff the living wage? This has been calculated by the Living Wage Foundation to be £8.45 per hour (£9.75 per hour in London).
This figure is higher than the national minimum wage, as it has been calculated in accordance with the actual living costs of modern life in Britain. The foundation and its supporters have urged employers to sign up to the living wage to demonstrate fairness and extend corporate social responsibility principles.
The CIPD has acknowledged that not all employers can provide a comprehensive package of benefits and reward schemes to their workforce. Small business may struggle to offer much more than basic protections; however, Cotton has explained that economic wellbeing is more than access to private healthcare and life cover.
Instead, it can consist of the much more instructive and supportive approach of making sure that employees are making use of the policies, procedures and perks available to them. This could constitute benefits such as childcare vouchers, travel expenses, salary sacrifice schemes and advice about tax credits. Another factor is whether staff have access to adequate pensions advice and ensuring that employers bear responsibility for encouraging staff to consider making more than basic pension provisions.
There are, of course, hundreds of examples when it comes to workplace benefits, but the ones the CIPD has promoted and adopted as being paramount to economic welfare are basic, uncomplicated and easily achievable. These include flexible working, health and life insurance, free financial advice, staff discounts, a good-quality pension scheme and, of course, paying the living wage.
The first Financial Capability Week took place in November 2016. The aim of the event was to raise awareness and it was a resounding success, getting the subject into the headlines and trending on social media. It is hoped by the organisations involved that this will become an annual event.
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