Employers play an important role in improving their workforce’s financial wellbeing. This includes paying people enough and fairly; providing benefits that reduce the risk of people falling into financial difficulty, help them should they do get into difficulty, and stretch the value of their pay packet; and providing training and development opportunities to support in-work progression.

The situation

Since the 2008 financial crisis, average (median) UK employee earnings have not grown as fast as prices. The introduction of the statutory National Living Wage has meant pay rises for those at the very bottom of the pay scale, but in real terms, median pay for those people working fulltime has fallen 5.9% between 2008 and 2022, with those employed in the east of England, the south-east of England, and London being particularly hard hit.

During the cost-of-living crisis, both regular and total pay has not kept with inflation. For example, while regular pay for all workers increased by 6.5% between November 2022 and January 2023, however, after inflation, then regular pay fell in value by 2.4%. CIPD research finds that between winter 2022 and winter 2023, the percentage of employees reporting they are keeping up with their bills and credit commitments without any difficulties has fallen from 61% to 48%. 

Money worries have been shown to impact employees' ability to do their job, and many employers are struggling to make the productivity gains they need to enable real-terms pay rises across the board.


CIPD viewpoint

As income providers, employers have a responsibility to support their workers’ financial wellbeing. This includes paying a fair and liveable wage, supporting people to progress into higher-paid roles, and providing access to information and guidance to help staff manage their finances, such as that provided by the Money Advice Service.

The moral case for supporting employee financial wellbeing has never been stronger, but there’s also a compelling business case.

For example, employers that pay the UK’s voluntary Real Living Wage report business benefits including enhanced reputation, easier recruitment, better labour relations and improved employee commitment and motivation.

Some may feel less able to introduce the Real Living Wage in times of economic uncertainty, but those that can afford it should avoid deferring their plans to do so.  In the longer term, the key to making a Real Living Wage a reality for everyone is to help businesses raise their productivity. Evidence suggests that enhancing the support available to help small firms improve their people management skills could help boost productivity and consequently wages.

However, employers cannot alone improve the financial wellbeing of their employees. The financial services industry, benefit providers, advisers and administrators, employees, and especially the government all have roles to play in minimising the risk of in-work poverty. From universal credit, education and housing to pensions, financial education and household budgeting, this will include rules and regulations as well as the use of ‘nudges’ and less use of jargon.


Recommendations for employers


  • Ensure that pay outcomes and processes in your organisation are fair, such as by checking the reasons for pay gaps by gender or ethnicity.
  • Pay your workers as much as you can afford and ensure that those at the bottom of the pay scale earn enough to live on.
  • Point employees to useful sources of financial information and guidance, such as the Money Advice Service.


  • Investigate becoming an accredited Living Wage employer. Employers that have signed up – or are in the process of signing – report a range of business benefits, from enhanced reputations and labour relations to improved commitment and motivation.
  • Create a financial wellbeing strategy that supports – and is supported by – the organisation’s overall health and well-being strategy. This should include running financial education and benefit communication programmes to make employees aware of the options open to them and how to get the most from their decisions.
  • Explore how low-waged workers can progress in their careers and increase their earning potential; for example, by providing learning and development opportunities that enable people to learn new skills and take on additional responsibilities.
  • Help stretch employees’ earnings by providing staff benefits, either directly or through a voluntary benefits scheme. Explore which benefits suit the needs of the workforce and investigate whether these can be offered flexibly so that individuals can select those that best suit their circumstances.
  • Put support mechanisms in place should employees fall into financial difficulties. This could include hardship loans, access to debt counselling or early pay access.
  • Invest in your people management capabilities to help boost productivity and make pay rises more affordable.


Actions for the UK Government


  • Protect living standards by maintaining the current levels of financial support to low-waged workers for as long as is needed during the cost-of-living crisis.
  • Support employment by maintaining the current levels of financial support to employers during the cost-of-doing business crisis.
  • Improve financial support during illness, such as through statutory sick pay.


  • Help improve financial wellbeing by embedding financial literacy in schools, further education, higher education and apprenticeships, and working with employers and the financial services industry to improve financial awareness among employees.
  • The key to improving reward for everyone is to help businesses raise their productivity. Within the industrial strategy, consider developing a stronger focus on boosting demand for skills and improving how skills are used at work to boost productivity (for example, by using sector deals to incentivise employers to take action in improving workplace practices). It should also make it easier for employers to invest more flexibly in the skills that matter to them and their staff, including through greater use of digital learning to strengthen life-long learning provision, by replacing the Apprenticeship levy with a broader training levy.

External resources


Learn how to produce a reward strategy which supports your organisational objectives

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