Member Article

Hospitality firms must tackle financial wellbeing, as recruiting war intensifies

More than two million UK hospitality workers are reporting declining mental health, because of money worries, according to a new report from financial inclusion experts and campaigners. The latest State of Financial Wellbeing index - one of the largest studies on the financial health and wellbeing of the workforce - found that hospitality workers are among the most financially stressed in the UK, but their employers are lagging behind other industries in stepping in to provide support.

Compiled by financial wellbeing experts at Wagestream, with input from leading bodies and experts such as Money and Pensions Service, StepChange and the Work Foundation, the State of Financial Wellbeing research programme benchmarks the views and actions of 10,000 workers and 1,000 employers across the UK. Launched in 2021, the programme is designed to improve understanding of the blockers and drivers of workers’ financial wellbeing.

The latest index, State of Financial Wellbeing: Hospitality Outlook 2023, highlights a financial stress understanding gap between UK hospitality workers and their employers:

• 87% of hospitality workers’ mental health is worsening, due to money worries
• 67% have cut back on their spending, and 30% used savings to make ends meet
• 42% have missed a bill due to the cost of living crisis - 56% more likely than the rest of the workforce
• 21% are struggling to focus at work, as a result - 31% higher than the rest of the workforce
• 30% worry about money every day - but just 1% of employers realise it
• 14% have £0 in savings - but just 1% of employers realise it

The gap between need and perception has led to a dramatic decline in trust towards employers, according to the latest State of Financial Wellbeing snapshot. Previously, 52% thought their employer cared about their financial health and 22% did not. These figures now stand at 30% and 35% respectively. Revealingly though, when employees do notice new support, they strongly approve and are more than five times more likely to report that their employer cares about their financial wellbeing.

There are signs that hospitality operators are taking steps to close the gap. Three quarters (76%) had introduced at least one new financial benefit to staff last year, with the most common being educational workshops, health cash plans, and flexible pay. Overall, 57% of hospitality employers focused more on the issue as a response to the cost of living crisis - a 20% decrease on the average across other industries.

The findings see experts now calling on employers and government to act urgently with further measures to reverse the trend - from support packages in the short-term, to improving workers’ rights and support structure in the long-term. In particular, the report recommends that hospitality employers look to improve the security of work provided to workers.

Ben Harrison, Director for The Work Foundation at Lancaster University, explained in a recent State of Financial Wellbeing index: “While millions more people may be in employment, the quality and security of jobs they are in often means they are unable to make ends meet. It will be acutely worse for the six million people in the UK who are in severely insecure work, and already face low pay and uncertain hours.”

With record levels of vacancies in the hospitality sector, the report recommends a number of actions employers can take to overtake other industries on wellbeing support and win in the war for talent. In particular, it emphasises a shift in thinking on the issue of pay - with hospitality workers 13% less likely to have asked for a pay rise, but around 10% more likely to say increased hours/shifts would help them. It recommends employers build their pay strategy around the ‘new dynamics of pay’:

1. Pay Security - working and earning enough, to fulfil financial obligations short-term
2. Pay Autonomy - choice over hours and pay cycle, in order to live with dignity
3. Pay Potential - the total amount of compensation, beyond base salary
4. Pay Growth - opportunities to move up a pay grade, and increase Pay Potential

Emily Trant, Head of Impact and Inclusion at Wagestream, comments: “Our latest State of Financial Wellbeing index highlights the two things hospitality workers want most: more predictable income, and the ability to choose their own pay cycle. Every hospitality operator is caught in a war for talent - and if they are serious about winning, these are the new dynamics of pay they should be building their financial wellbeing, and broader people, strategy around. By doing so they will see a huge swing in recruitment, retention and shift uptake - which are key foundations in the current environment.”

This was posted in Bdaily's Members' News section by Callum McCaig .