The government has been urged to introduce legislation to force employers to offer personal financial education programmes to their staff, alongside tax breaks and grants for companies that introduce workplace training.
A report, published today by insurer Axa, argues that a £120m per year government investment in financial education in the workplace could increase long-term economic stability, while reducing absenteeism.
The report, The Roadmap to Stability – Consumer Financial Education, warns that while economic recovery is a public policy priority, little has been done to address the lack of financial capability of many employees.
It says ministers should step in and force employers to offer financial education sessions, backing this up with grants for small companies and tax breaks for larger employers.
The suggested £120m a year would cover the cost of a single one-to-one session with an independent financial adviser, and a follow-up telephone consultation, with the government allowing £100 per employee. This assumes a take-up of 20% of the six million people employed by small-to-medium sized firms in the UK.
Paul McMahon, managing director at Axa, said these measures would provide short-term benefits for employers, as well as long-term economic stability.
“Our own research shows that the cost to employers of absenteeism was £1.4bn last year, with the major cause of that being stress – and the major cause of stress was financial worries,” he told Personnel Today.
Legislation is required to ensure the problem of a lack of financial capability does not get even worse, according to McMahon.
“Positive encouragement is the key, but we need a degree of stimulus to ensure the problem does not become even more profound,” he said.
The report calls for annual surveys of financial capability through the Financial Services Authority (FSA) or a new agency, and for standards body Investors in People (IiP) to add financial capability investment in its awards criteria.
However, Simon Jones, IiP chief executive, said its approach was not this prescriptive. “We recognise that each organisation is different, so assessment is tailored towards meeting each organisation’s unique business needs,” he said.
The FSA pointed out that it already runs workplace financial training programmes for employers.
The free-of-charge training comprises an hour-long seminar, given by a trained presenter, together with a free supporting guide for each attendee.
The FSA said it has rolled this out to about 750 employers, reaching three million staff.