The price and impact of financial stress in the workplace

The growing workplace crisis: financial stress

In today’s economic climate, financial stress is more than just an individual burden—it’s a workplace crisis. With the cost of living rising and economic uncertainty looming, more employees than ever are struggling to make ends meet. The effects of financial stress extend beyond personal lives, infiltrating workplaces and impacting productivity, engagement, and overall business success.

It’s a hidden epidemic that often goes unnoticed by employers, yet the statistics paint a stark picture:

• Financial stress is the number one cause of mental illness in the UK​.
• 11.8 million employees say their financial situation directly affects their ability to perform at work​.
• 38.9 million working hours are lost in the UK every week due to poor financial wellbeing​.
• Absenteeism caused by financial distress costs UK businesses £2.5 billion annually​.
• In 2023 alone, an estimated 13 million workdays were lost due to financial worries​.

These figures highlight the critical need for businesses to take action. Financial wellbeing is not just about pay—it’s about security, stability, and ensuring employees have the tools and resources to manage their finances effectively.

Why employers need to care about financial wellbeing

The workplace domino effect

When employees are worried about money, they bring those anxieties to work. This leads to:

1. Reduced productivity – Employees struggling financially often experience higher stress levels, which directly impact concentration, motivation, and efficiency.
2. Increased absenteeism – Financial distress contributes to higher rates of sickness absence as employees battle stress-related health issues.
3. Higher staff turnover – Employees who feel unsupported financially may seek better-paid roles elsewhere, leading to recruitment and training costs.
4. Lower morale & engagement – Money worries create emotional strain, which can result in disengaged employees who are less committed to their roles.

The SME challenge: levelling the playing field

Small and medium-sized enterprises (SMEs) face greater challenges when it comes to providing financial wellbeing benefits. With rising costs, tax increases, and budget constraints, many struggle to compete with the financial perks and security offered by larger corporations​.

However, financial wellbeing initiatives don’t have to break the bank. SMEs that invest in practical, affordable solutions can build a resilient workforce that remains engaged and loyal, ultimately benefiting business growth.

How financial resilience transforms the workplace

For employees:

• Less stress = more focus – Employees who feel financially secure can dedicate more attention to their work.
• Freedom from financial anxiety – Reducing financial burdens improves mental health, leading to happier employees.
• Confidence to handle the unexpected – Financially prepared employees can navigate challenges without undue worry.

For employers:

• Higher productivity – Employees can focus on their roles without being distracted by money worries.
• Better employee retention – Providing financial wellbeing support fosters loyalty and reduces turnover.
• Reduced costs of absenteeism – Fewer sick days lead to more stability in the workplace.
• Stronger employer brand – Businesses that prioritise employee wellbeing attract and retain top talent​.

Practical strategies for building financial wellbeing

Employers can make a difference—without excessive costs. Here’s how:

1. Financial education programmes

Empowering employees with knowledge is key.

Many employees lack essential financial skills, from budgeting to saving and debt management. Providing access to financial education resources—such as workshops, online courses, or financial coaching—can help employees make better money decisions and reduce stress​.

2. Salary sacrifice benefits

A salary sacrifice scheme allows employees to exchange part of their salary for non-cash benefits—helping their money go further. These schemes can include:

• Pension contributions
• Cycle-to-work schemes
• Technology and travel discounts
• Affordable, fully covered car schemes

One of the most impactful benefits is affordable, fully covered car schemes, which allow employees to lease brand-new, fully maintained vehicles through pre-tax salary deductions. These schemes can reduce costs significantly by including:

✅ Insurance
✅ Servicing & maintenance
✅ Breakdown cover
✅ Road tax

By spreading the cost over monthly, tax-efficient payments, employees can drive a reliable car without the upfront financial strain. This not only eases personal financial pressures but also ensures staff have secure, stress-free transport to work​.

3. Investing in employee wellbeing

A happy, healthy workforce is a productive workforce. Investing in mental and physical wellbeing initiatives—such as counselling services, access to online GP, and flexible working policies—can reduce stress and improve retention​.

Tip: Offer access to mental health support and financial counselling services to help employees navigate difficult financial periods.

4. Lifestyle benefits to reduce cost of living pressures

Providing discounts on groceries, retail, utilities, and entertainment can help employees stretch their pay further. These types of benefits enhance financial security while improving overall job satisfaction​.

5. A safety net for life’s unexpected events

Many employees lack savings for emergencies, leaving them vulnerable when unexpected expenses arise. Employers can support their teams by offering:

• Life protection cover for their loved ones
• Income protection policies
• Private medical insurance and critical illness cover

These initiatives provide financial security and peace of mind, reducing stress and preventing financial crises​.

The return on investment of a financially resilient workforce

Investing in financial wellbeing isn’t just an employee perk—it’s a business investment. Studies show that companies that prioritise financial wellbeing experience:

• 18% increase in sales productivity
• 23% rise in profitability
• 81% reduction in absenteeism
• 10% rise in customer loyalty (Gallup, Financial Wellbeing Report 2024)​.

Final thoughts: financial wellbeing is a business imperative

Employers who ignore financial wellbeing risk facing high turnover, low productivity, and disengaged employees. On the other hand, companies that prioritise financial resilience benefit from a happier, healthier, and more productive workforce.

Financial wellbeing is no longer an optional benefit—it’s a critical business strategy that drives success. By implementing affordable, impactful solutions, businesses can empower employees, improve retention, and gain a competitive advantage in today’s market.

Take action today

SMEs don’t have to struggle to provide financial wellbeing benefits. Hug offers SME tailored solutions that help businesses build financial resilience without breaking the bank​.

Hug your people, hug your business. Take the first step towards a financially resilient workforce.