More than a third (37 per cent) of employees would be unable to pay their bills if they were suddenly taken ill, new research has found.
The report by employee benefit provider BHSF – entitled A high wire with no safety net – also discovered that roughly a quarter (28 per cent) of the 1,000 UK staff surveyed would need to turn to credit cards if they had a payment pop up out of the blue, while one in 10 (10 per cent) would need to ask their family for help.
“By the time mortgages, car repayments, council tax and four weekly shops are taken into account, the vast majority of the UK’s workforce will find themselves in dire financial straits in a very short period of time. Many will be forced back to work when they are not fit to return,” said Brian Hall, managing director of BHSF.
BHSF also warned that many employees were overly optimistic about their ability to weather a financial storm and, given the current high levels of credit card debt, many could be shocked to find their savings would not stretch as far as they hoped.
Those aged between 30 and 44 were found to be the least prepared for a sudden financial shock. This was particularly worrying, said BHSF, because it is this generation that is most likely to have financial dependents, such as children and elderly parents.
“Employees appear to be in a state of denial over how precarious their financial situation is,” commented Hall. “All it takes is one short bout of ill-health to leave two-thirds of the entire UK workforce in serious financial straits, which could take many years to recover from. Average savings will last for little more than six to eight weeks, if that.”
A number of commentators have recently warned that high inflation, combined with political instability caused by Brexit and last month’s general election, has squeezed wages. Torsten Bell, director of think tank the Resolution Foundation, cautioned last month that real pay was on track to be the worst it has been in more than 200 years by 2021.
Meanwhile, a report released in January by the CIPD and Close Brothers Asset Management discovered that a quarter (25 per cent) of employees were so worried about the state of their finances that it was affecting their work performance.
The Office for National Statistics (ONS) announced last month that the consumer price index had increased to 2.9 per cent for the year to May, up from 2.7 per cent for the year to April and the highest it has been in nearly four years. The ONS is due to release inflation figures for the year to June tomorrow.
Over the weekend, chancellor Philip Hammond sparked ire among public sector workers when he told the BBC’s The Andrew Marr Show their pay had “raced ahead” of their private sector counterparts since the 2008 financial crisis, despite the current 1 per cent cap on pay increases.
“The chancellor’s remarks show he is completely out of touch,” said Christina McAnea, assistant general secretary of trade union Unison. “After seven years of a punishing pay cap, all public sector employees need a pay rise. The care worker hurrying from house to house doesn’t feel overpaid, nor does the hospital cleaner working round the clock, or the teaching assistant going the extra mile for the children she supports.”