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Cebr has been commissioned by Aegon to conduct a review into financial wellbeing in the UK workforce. This report updates previous research by Cebr and Aegon on financial wellbeing and the implications for workplace productivity. Cebr’s initial report on financial wellbeing and productivity in 2018 sought to systematically analyse financial wellbeing across the UK employee population and calculate the impact on workplace productivity.

The UK economy has experienced significant change since the last report. The onset of the Covid-19 pandemic, along with the UK leaving the European Union, has wrought severe disruptions across the UK economy, affecting virtually all industries albeit to varying degrees. With increasing uncertainty a key feature for many employees, it is likely that the significant changes to the UK economy have adversely affected employees’ financial wellbeing.

Some of the key findings from the report are:

• 10% of full-time and part-time employees missed days at work due to financial worries, with an average of 4.9 worker days lost per year within them. This suggests that over 2.5 million private sector workers have had to take time off in the last year due to their financial wellbeing, roughly translating to 13 million worker days lost.

• 18% of full-time and part-time workers noticed a decline in productivity at work due to financial worries. This implies that approximately 4.9 million full-time and part-time employees have experienced a fall in productivity at work due to their financial condition.

• Segmenting for firms of different sizes, the estimated average annual cost of absenteeism and presenteeism due to financial troubles for small, medium and large firms is predicted to be £4,544, £22,746, and £323,390 respectively.

• The estimated annual costs for small businesses when employees are distracted by thoughts on meaningless work, an uncertain life path, and being underpaid come up to £9,379, £10,340, and £9,917 respectively.

• Meanwhile, medium-sized businesses are projected to lose £46,945, £51,755, and £49,637 annually when their employees are distracted by thoughts on meaningless work, an uncertain life path, and being underpaid respectively.

We estimate that around 2.6 million private sector employees have had to take time off in the last couple of years due to their financial wellbeing, leading to a loss of just under 13 million days of work. Given information about the income levels of these employees and further insights about the associated spill-over costs arising in affected workplaces, we estimate the cost of workplace absenteeism to stand at £2.5 billion per year.

Moreover, employees in financial distress are more likely to be distracted at work which has consequences for their workplace productivity. Just under one in five (18%) of survey respondents have experienced a time in the past two years where there has been a decline in their personal productivity at work due to problems related to their financial situation. This adds another £3.7 billion per year to the cost for UK employers. In total, we estimate that absenteeism and presenteeism caused by a lack of financial wellbeing costs businesses £6.2 billion each year.