How HR can help tackle financial exclusion

People and recruitment professionals have an important role to play in making sure workers can access financial tools such as bank accounts, explains Matt Oldham

When we talk about financial exclusion, what image does it conjure up? Do you think back to the 2004 Morecambe Bay disaster when 23 Chinese cockle pickers died having come to the UK to find a ‘better life’?

Or more recently, the raids earlier this year at hand car washes in Liverpool and Carlisle, where the Gangmasters and Labour Abuse Authority (GLAA) found illegal immigrants working 10-12-hour days, seven days a week, and with no protective equipment? 

Financially excluded candidates are more vulnerable to these kinds of illegal working practices or forced labour. Working in low-paid and unskilled job sectors such as agriculture, cleaning, care or warehousing, workers can be subject to poor living conditions, have their wages withheld and their ID taken away. Hardly what you would describe as starting a ‘better life’.

Overseas recruitment is key to solving the labour crisis

The UK has a clear need to employ overseas workers – you only have to look at the state of the agriculture and hospitality industries this summer for proof of this, despite the Seasonal Workers Pilot bringing in an additional 30,000 overseas workers into the agriculture sector. 

So the question that needs to be asked is, why are workers still becoming victims to modern slavery practices when these sectors are crying out for legal workers? Is financial exclusion the reason they are drawn to work for gangmasters, in return for a roof over their heads and a measly cash sum at the end of their working week? HR and recruiters, now is your time to stand up and take responsibility for supporting financial inclusivity.

Financial exclusion isn’t just affecting illegal immigrants

Perhaps the first step is to understand what financial exclusion is. Financial exclusion isn’t limited to those who come to work in the UK illegally. In fact, according to a 2017 FCA survey, 1.3 million adults in the UK were ‘unbanked’. It is also estimated that one in four adults will experience financial exclusion in their lifetime, according to We Are Digital. 

With wages predominantly paid directly into a bank account, workers who have no access to a UK banking service are left financially excluded. It may be that they do not have a permanent UK address, or sufficient proof of ID or utility bills to meet banking regulations. It could simply be that they had financial difficulties in the past with overdrafts and/or debt, or illiteracy means they do not understand the banking process.

For overseas workers arriving in the UK, opening a bank account can be a long, tedious and difficult-to-navigate process – especially with additional language barriers to overcome. This can leave them vulnerable to exploitation – caught in a vicious circle of needing to work but with no bank account to pay their wages into. No wonder cash-in-hand becomes so appealing.

Another question that should be asked is how do you even know if the bank account you are paying the wages into is going directly to the worker and not being controlled by a gang leader?

What can HR and recruiters do to help tackle the problem?

HR teams and recruitment agencies need to be educated on the financial challenges that their domestic and international workers are facing. Justine Fawzi, managing director of Taylor Martin Recruitment, believes “financial inclusion means building a world of greater equity and opportunity. For recruitment agencies, it’s about offering candidates access to useful and affordable financial products and services so they have access to employment and security, therefore reducing vulnerability”.

It’s not just about overcoming recruitment challenges posed by the Covid-19 pandemic and Brexit, it’s about understanding why members of society are left vulnerable to exploitative labour practices:

1. Financial education will help foster financial inclusion

It’s important to be aware of cultural challenges. In East and West African countries, for example, cash is still very much the primary payment vehicle. The same is true of countries such as Romania and Bulgaria, whose citizens are primarily workers in the agriculture sector.

In contrast, the UK is increasingly becoming a cashless society, spurred on by the Covid-19 pandemic, with 13.7 million people living a 'cashless life' in 2020, according to a UK Finance study. Used to receiving cash as a source of payment, workers like these are often left vulnerable to gangmasters offering them cash-in-hand work, whilst taking a cut of their earnings.

It’s up to HR, recruitment and payroll teams to come together to support both domestic and international candidates with their broader financial education and wellbeing. 

2. Seek out support from experts in this area

It can be very difficult, particularly for small but busy HR and recruitment teams employing large numbers of temporary workers, to provide the level of support required to each and every person they take on.

In regards to labour exploitation, recruiters need to carry out due diligence when it comes to their labour supply chain, with regular audits, and an understanding of the next steps of who to report any suspicious activity to. 

Partnerships with key organisations can help to fill this all important gap: 

  • The GLAA regulates businesses who supply labour to the agriculture, shellfish gathering, food processing and packaging sectors. 

  • The Association of Labour Providers (ALP) promotes responsible recruitment across industries such as construction, food, manufacturing, warehousing and the supply chain. 

  • Just Good Work helps businesses to develop an informed and engaged workforce from overseas, and empowers migrant workers with knowledge about working in the UK.

  • The Emerging Payments Association’s ‘Project Inclusion’ provides vital resources on the issues of financial exclusion and the poverty premium. 

3. Foster a sense of community

For overseas workers coming to the UK, a sense of community and connection is crucial and can be an invaluable tool for information sharing and education around financial issues. Social media such as Facebook groups can provide a vital support network with useful information on what it is like to live in a new country like the UK. 

This can not only improve overall health and wellbeing, but can assure safety, protect those who may be vulnerable, and help prevent exploitation.

HR teams and recruitment professionals have a valuable role to play in tackling financial exclusion. Not only will this help to avoid losing both time and money on unbanked candidates, it will also help in trying to fill vacancies in those sectors that are most reliant on overseas workers, and facing significant labour shortages.

Matt Oldham is co-founder of Unizest