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HR Out of Touch with Employee Debt – UK Survey

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Young people in Britain face mounting debts and unaffordable living expenses according to new research from Neyber, but employers believe employees are borrowing less this year.

The September 2018 study, carried out among 10,000 UK employees, found that 70% of people under the age of 34 need to borrow regularly either to pay their monthly bills or deal with day-to-day living expenses.

However, only 77% of employers, down from 97% last year, feel that employees are borrowing. According to the “DNA of Financial Well-being” report, borrowing for everyday living expenses has increased from 48% to 50% (2017/2018 respectively).

For HR, the impact of money worries can be significant. The findings in the survey show that six in ten employees said their behavior changes when they are under financial pressure.

This increased to more than 7 in 10 for those aged under-34. They said that money worries change their internal mindset and attitudes, and their ability to maintain focus at work.

Forty-five percent said that money worries affect their job performance and 40% said they affect their relationships at work. Employers are aware of financial worries causing changes in their employees. Sixty-eight percent agreed that this affects individuals’ behaviour, 69% their performance and 67% relationships at work.

Is It The Gig Economy?

Heidi Allan, head of employee well-being at Neyber, said, “The survey show shows a real disconnect from what employers are thinking and what’s reality, particularly for younger employees.

One of the reasons for this regular borrowing may be that more young people have jobs with fluctuating income. Sixty-eight percent of 18-24 year olds said their income changes each month. Over a quarter (27%) said their income varies by more than 30%”.

Neyber’s study shows there is evidence that debts are spiraling. The average unsecured debt among 25-44 year olds has risen to £14,794.35 in 2018.

Those in the £20,000 – £29,999 earnings bracket – which includes those on an average salary – are spending an average of 37% of their income on debt repayments, including mortgage or rent, per month. Excluding mortgages and rent, the average amount of unsecured debt employees pay each month is £325.

More worrying is that young people are turning to more dangerous forms of lending just to get by. Thirty-three percent of 25-34 year-olds use credit cards for day-to-day borrowing – higher than any other age group. The survey showed that the younger you are, the more likely you are to use a payday lender. Eight percent of 18-24 year olds said they had used one, compared to four percent of 25-44 year olds and zero percent of those who were over 65.

The combination of regular borrowing and uncertain incomes has led to many young people feeling stressed. Sixteen percent of 18-24 year olds said that their finances were out of control, while 20% of 25-34 year olds said they were only just coping.

Phil Andrew, CEO of StepChange, said: “Employers have a strong interest in improving the financial well-being of their employees and can be well placed to sell the benefits of seeking advice before problems get out of control.”

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