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The Impact of Debt on Your Worklife

It’s an easy to spout cliché: happy employees are productive employees. Anecdotally, we all see this in action: the enthusiastic, self-driven and motivated employees are the ones who are content and happy. However, this is not an easy concept to pin down, or indeed facilitate. We do know that debt can be all-encompassing, becoming an umbrella problem that shadows everything else. It stands to reason that personal debt can have a huge impact on an individual’s work life.

UK Personal Debt

As Britain began to claw its way out of recession, the nation had begun to see a decline in the levels of unsecured personal debt. However, despite this initial improvement, unsecured debt is now growing significantly faster than income. Indeed, according to the Money Charity, the average UK household now has debt totally £53,083.

Why is this happening? Notably, there seems to have been a seismic shift in attitudes towards personal debt over the last few decades. The level of personal debt now seems to be a reflection of modern British society and the attitude today that debt is more acceptable, and inevitable. This is perpetuated by the relative ease of gaining credit. Add in a radical change in student funding meaning graduates are expected to enter the world of work in debt, and a recession, and it’s a perfect storm for high levels of personal debt.

The Effect of Debt on Individuals

One out of every two adults in the UK with debt have depression. Depression, anxiety and stress bring with the certain symptoms that can effect individuals in all areas of their life, and notably, their worklife. Depression is associated with a difficulty concentrating and maintaining concentration. It also can bring about indecisiveness, forgetfulness and fatigue.

In 2015/16 UK employers lost 11.7m days due to stress-related absences. Whilst this figure isn’t broken down in to causes of the stress, debt is almost certainly in there as a main player.

The Impact of Debt on Employees

Debt creates stress in the individual employee, and whilst work and private financial lives are kept distinctly separate, the individual employee may struggle to maintain this demarcation. A stressed employee, with the stressors coming from their private life such as debt, will inevitably be more focused on their private issues than on their work. Therefore, an employee’s financial situation will have a negative effect on work performance.

Debt also significantly effects individual employees in other ways. They are less likely to be the risk takers with their own employment. Debt may be the driving force between an individual deciding to take a new role or stay with what they know. It may act like an anchor, holding individuals back from achieving their true potential. In fact, the Citizen’s Advice Bureau’s research shows that debt can significantly affect work-related life decisions. 49% of those with debt are unlikely to start a business (compared with 33% of the general working population); 41% of those with debt are less likely to study or retrain (compared with 27% of the general working population); and 28% are less likely to change jobs (compared to 19% of the general population).

From an individual’s perspective it looks as those with personal debt are simply attempting to keep their head down and plough away at earning what is needed. From an employer’s perspective this data implies a significant problem with potentially having demotivated, unproductive employees. Employers must take individual’s personal debt seriously if they want to get the best productivity from their workforce.

What Can Employers Do About Employee Personal Debt

First of all, employers need to realise that personal debt will impact on individuals’ worklives. This is a certain by-product and so should be addressed. Whilst traditionally, personal and private lives have been considered entirely separate entities, it would appear the two meet more readily than we realise, and therefore should consider employees’ working lives in the context of what can be done to assist those struggling in their personal lives, for example through debt problems.

Therefore, the first approach to take is to foster a more open employer-employee relationship where employees feel it is more in their interests to share the personal issues that could be affecting their productivity. The way to ensure this is positive and supportive communication. It may even be essential for an employer to know some detail about an individual’s debt, for example if they have an Individual Voluntary Arrangement (IVA) or a Scottish trust deed, as it may limit their ability to handle money.

Debt and financial management can be considered as part of a wider employee wellbeing programme. Indeed, if your business is large enough, then financial planning advice and support could be offered as a wider raft of benefits. All employees, whether currently in debt or not, would benefit from financial and debt education.

Employers should take their pay structures and the running of their payroll seriously and ensure it is reliable and fair. Whilst a payroll ‘mistake’ may not seem significant to a higher-level manager with no debt, to a recent graduate earning less but with higher debts, it could be an immense source of stress and anguish.

The Impact of Debt of Your Worklife

As an individual it is important to recognise that debt has the capacity to significantly affect all other areas of your life, including your worklife. Knowing that debt is causing wider problems can be the first step to minimising them. Seek support, both from agencies like us and from your employer, so that debt doesn’t need to dominate your life and thoughts whilst at work.

With careful management debt can be managed so that it no longer affects your worklife, and you can ensure you make the worklife decisions that are best for you, and remain optimally productive. By taking a realistic view of the impact of debt on your life, you can take the steps needed to, at first, minimise debt’s impact, and eventually eliminate it altogether.

If you need more information about the options available to you in dealing with your debt, you can always speak confidentially with one of our friendly advisors on 0808 2085 198.

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