6th January 2017 by Steve Herbert
As we enter 2017 it is becoming increasingly apparent to all that the likely future trading relationships of the UK are still very much a work in progress. No one truly knows what lies ahead for the country, yet this lack of detail should not deter employers from taking action to ensure that each and every business is as prepared as it can be for the future unknowns.
But where to start in this process given a lack of detail? At the risk of sounding like a broken record (and as I have covered several times in recent months including this article before the EU Referendum was announced) I would suggest a long hard look at Britain’s very poor productivity figures would be of primary importance for both the nation and the individual organisations that contribute to this statistic.
Now productivity is a big beast, and to tackle this monster employers will probably need to look at multiple causes of the problem. This may include training, technology, infrastructure, absence management, and company ethos. Yet other, perhaps less immediately obvious, factors may be equally important and can be easily addressed for minimal cost.
One such unexpected area for consideration has been highlighted by separate reports in recent weeks. The first topic is something known as “The Poverty Premium”. The title reflects the extra costs that low income families have to meet to fund everyday costs. Such families may have to pay more for services and borrowing as a direct result of their lower income status, thus making their ability to manage day to day finances ever more difficult. The average annual poverty premium per low income household was recently calculated by the University of Bristol as £490 per year.
But what of it, and why is this important to employers?
To answer this question we firstly need to look at how many of those low-income groupings are likely to represent UK workers. The Joseph Rowntree Foundation last month published a report which highlighted that in-work poverty has hit record highs. Indeed the opening line of their report states that “one in every eight workers in the UK – 3.8 million people – is now living in poverty.”
So, taking these two unrelated facts together, it is apparent that The Poverty Premium will be a genuine problem for many workers. Employees distracted by such money worries are unlikely to be as focused (and therefore productive) as their employer would wish. Bad news for all concerned.
This has been recognised by government, and a review of markets that are not working for consumers it about to get underway. Yet any positive outcomes of such a process may be many years in the making and delivery. In practice therefore consumers will need more immediate help in this area.
This is where employers can and should step in.
Many employers offer Employee Benefits packages which offer goods and/or services at discounted rates. Admittedly some such offerings may soon be curtailed as a result of the Chancellor’s recent announcement to limit Salary Sacrifice benefits, yet many others will continue to help employees with everyday costs and expenditure. In addition some even circumnavigate the need for credit checks (a major problem for many low-income households seeking finance options).
So promoting and perhaps expanding such offerings will become ever more important.
Another approach is for the provision of genuine holistic Financial Education in the workplace. Whilst educating workers on financial issues may not always make avoidance of The Poverty Premium possible, it will certainly help many make more informed decisions to achieve that outcome.
To be truly effective both the better use of Employee Benefits and Financial Education will require employers to invest some time and effort on regular communications. But this is surely a price worth paying to ensure that each employee maximises the use of their income and benefits offering. In return employers should find that they have a more focused and engaged grouping of workers, which is of course a key component to improved productivity.
So a quick and painless win in the battle for improved productivity, and one that I would encourage many more organisations to embrace at this pivotal time for the UK.