Member Article

Debt Stress at Work: What Can Employers Do?

Total lending to individuals in the UK has hit £1.5 trillion for the first time, according to The Money Charity, with private debt growing on average by more than £1,000 per adult in the past year.

The new figures show that the average debt for a UK adult totalled £29,770 in September 2016, or 13.7% more than the average annual salary. And we’re clearly not coping – shockingly, 264 people a day are declared bankrupt or insolvent, equating to one person every 5 and a half minutes.

The Office for Budget Responsibility expects household debt to nearly double by the first quarter of 2121. In the meantime, inflation, which has already doubled since July from 0.5% to 1%, has been projected to rise to 2.2% by 2020 – this could fuel further insolvencies as people struggle with repayments.

This is a worrying picture for most people – but could it also impact your business?

Most businesses already recognise that staff well-being is a cornerstone of any successful company. Happier staff tend to be more productive, take fewer absences and make fewer mistakes, while showing a caring face may also increase staff loyalty and retention – so it’s worth your while to tackle problems such as employee debt promptly.

But how should you go about it? We’ve put together some top tips to help address this tricky issue sensitively and effectively.

1. Watch out for warning signs: Have you noticed someone taking a lot of personal calls, calling in sick more frequently or showing other signs of stress? Are they asking for a rise, or even an advance? Spotting the signs and starting a conversation early could help stop an issue before it becomes unmanageable.

2. Offer reliable information: Education is key to prevention, so you may want to source and distribute some information packs from debt charities, such as Step Change, National Debtline, or TrustDeed if you’re based in Scotland. Even better, consider an Employee Assistance Programme (EAP) offering confidential help over the phone or face-to-face. But make sure you never directly offer financial advice – only Independent Financial Advisors (IFAs) are certified to do this in the UK.

3. Get the word out: Once you’ve got your information packs or services in place, advertise them – it’s crucial to make talking about debt less of a taboo, and let your employees know help is easily available. Maybe use your intranet, or put an information pack into a shared drive, or tackle the subject in staff meetings.

4. Be approachable: Debt is a very sensitive issue and one which people may balk at broaching with their boss. Ensure it’s clear you’re always available to talk – and that any conversations will be strictly confidential.

5. Pay a living wage: Perhaps the most meaningful way a business can help prevent employee debt is to become an accredited Living Wage Employer. This can be done in as little as 10 working days, depending on the size of the company, and according to the Living Wage Foundation, it could improve the quality of your employees’ work, boost recruitment and cut absenteeism.

Finally, you can empower your employees to help themselves with some practical tips. Take a look at our round-up of 12 bad money habits and how to stop them.

This was posted in Bdaily's Members' News section by Irma Hunkeler .