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Category: For Employers
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    • Which employees need extra support in 2023?

    We take a look at the third edition of the HL Savings and Resilience Barometer and how it can help you, as an employer, support different groups in your workforce during the coming year.

    Important notes

    This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in. These articles are intended for employers and HR professionals, not for individual investors.

    Hannah Tennant

    26 January 2023

    By the end of 2022, we estimated that nearly 40% of households had unsustainable levels of spending. And although the cost-of-living crisis is likely to have peaked in Q4 2022, the pain of rising prices is set to continue throughout this year.

    Inflation is expected to stay higher for longer than we previously forecast and wages are unlikely to make up the ground they lost over the last 12 months. This means that households will need to cut back on spending, use savings or borrow more to make ends meet.

    For the lower earners, young people and single person households in your organisation, it’s going to be a tough year.

    How the cost-of-living crisis is affecting households differently

    • Income

      • In the 12 months to October 2022 the price of essentials, such as food and heating, has risen at twice the pace of non-essential items.

      Inflation has been skewed towards essential items

      Source: ONS data, Oxford Economics analysis

      Households on lower incomes are bearing the brunt of these soaring prices as they spend a larger chunk of their income on the essentials. This impacts the purchasing power of the poorest more than any other segment.

      Think of office facilities staff or those in a service role who need to go into their place of work every day. They’ll spend more of their income on increased travel costs than employees who can work remotely.

      For those with no savings left, there’s an increased risk that this year will see more people on lower incomes being forced into debt.

      These immediate challenges have a negative effect on long-term resilience. Lower income households are now less financially secure than before the pandemic and almost 9 in 10 of the lowest income households have poor or very poor financial resilience.

      However, almost a third of middle-income households now fall into this category, showing the squeeze isn’t simply impacting the lowest income households.

    • Age

      • The age of your employees will also impact their financial resilience, with the least resilient aged 20 to 29.

      Rising prices have hit younger people harder, with 1 in 10 of those aged 16 to 29 behind on energy bills. This is no surprise as younger people tend to be on lower incomes and spend a higher proportion of their salary on the basics.

    • Family makeup

      • Children understandably reduce financial resilience with the additional costs they place on households, but the findings draw out the stark differences that come from sharing household costs.

      Only 13% of single person households without children have very good financial resilience compared to 41% of couples with no children.

    • Employment

      • The barometer also shows that self-employed and those employed part-time have far lower resilience than those employed and working full-time.

    What to expect in 2023

    • Tumbling house prices

      • The barometer forecasts a fall of 10.4% to house prices from Q3 2022 to the end of 2023. First-time buyers or anyone remortgaging this year face higher interest rates and borrowing costs, which will impact on both savings and debt.

      Gen Z and Millennial homeowners tend to borrow a larger proportion of the house value and will face a fall in financial resilience of almost three times that of their Boomer counterparts. Younger homeowners are expected to suffer the biggest hit to long-term financial security.

    • Mounting debt

      • We expect an increase in debt management concerns in 2023. Runaway inflation hasn’t just damaged our ability to make ends meet today, it has also affected the levels of debt we’re carrying and the resilience we’re building for the future.

      How national financial resilience has changed from pre-pandemic to 2022 Q4

      Source: Oxford Economics

      *this value is an estimate

    What can employers do to help?

    The impact of high inflation and current economic factors are having an impact on employees’ financial resilience - and there’s a disproportionate squeeze on low income households.

    The barometer shows that by the end of 2023, nearly a quarter of households will be forced to adapt financially.

    The breakdown of data can assist policy makers and employers in supporting different groups during the coming year. The employer plays an important role in driving financial education within an organisation through shaping employee education and benefits. Our Five to Thrive framework can help employers identify how they can guide employees towards a more financially resilient future.

    We’d love to speak to you further about our thinking. Get in touch with a member of our team to find out more.

    Read the full barometer report and findings

    What is the barometer?

    We’re delighted to publish our third 6-monthly report into the financial resilience of the nation, in partnership with Oxford Economics.

    The barometer is building a picture of people’s financial resilience that tells us where people are vulnerable and about the gaps in their finances. We can look at the long-term impacts of today’s events, as well as the more immediate strains on finances.

    The breakdown of data in this third wave is especially interesting for policy makers considering how to support different groups in the cost-of-living crisis and to help them understand the impact their decisions have.

    Read the full barometer report and findings

    More Articles

    Important notes

    This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in. These articles are intended for employers and HR professionals, not for individual investors.

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