Deepening debt sparks renewed concern for employee wellbeing as cost of living bites

Close up of open purse showing credit cards
  • Four in five (79%) UK employees are concerned about the increasing cost of living, with one in three (34%) just getting by financially
  • Nearly a third (30%) of employees on lower incomes feel that current debt levels are detrimental to their wellbeing
  • One in three (34%) feel they are no longer prepared for unforeseen life circumstances including accidents, serious illness, or redundancy
  • Half (50%) say their current financial situation is affecting their mental health

Four in five employees across the UK are concerned about ongoing increases to the cost of living (79%), according to new research from Aviva which shows the over-45s are collectively the most affected.  

The fourth edition of the insurer’s Age of Ambiguity study, which has been tracking employees’ experiences of work since before the Covid-19 pandemic, shows how socio-economic uncertainty and financial pressures are impacting people’s wellbeing.1

Its findings show feelings of financial distress were widespread even before the economic and political upheaval that has heightened during the Autumn.

Among lower income employees – those earning less than £30,000 – nearly a third (30%) report that their current level of debt is detrimental to their wellbeing. Across all salary brackets, the number of employees who feel this way has risen sharply year-on-year, from 26% in 2021 to 34% in 2022, among companies with more than 1,000 employees.

Aviva’s findings also highlight a gender divide in the experience of financial wellbeing. Across all age and income groups, less than half (49%) of women would describe their financial wellbeing as good, compared to 67% of men. Women are also more likely to be concerned about their finances in light of the increases to the cost of living, than men (81% to 76%).

Households more exposed to unforeseen events

The report shows that financial wellbeing – defined as “a sense of security arising from the feeling you have enough money to meet your needs” – has significantly decreased among workers with household incomes under £36k.

Three quarters (75%) of all employees that have experienced a reduction in their income, report experiencing additional stress as a result.

One in three (34%) feel they are no longer prepared for unforeseen life circumstances including accidents, serious illness, or redundancy that could affect them or their families. Worryingly, this rises to 50% for employees with lower personal incomes (under £30,000 per year), suggesting that individual salaries are often no longer enough to cover unexpected events.

Financial uncertainty weighing down on mental health

Aviva’s study also explores how employers can strike the balance of providing a greater duty of care to employees against an increasingly difficult backdrop, while also taking steps to future-proof their business.

Half (50%) of all employees say their financial situation is negatively impacting their mental health, with those earning up to £24,000 per year the most likely (60%) to feel their finances are negatively impacting their mental health.

Across all income groups, two in three (66%) employees feel that managing their finances has become more difficult recently, as economic pressures have gradually begun to impact households.

The report considers the role employers can play in helping employees with their personal finances and financial wellbeing, while recognising that anxiety from economic concerns is complex and individual. Open conversation around money, and signposting support that is available, will help to make sure a range of people across different incomes, ages, genders and other groups are catered to.

Employers can also provide support for employees’ broader mental wellbeing to help them build resilience and be better equipped to face money issues if they arise. This support can come in the form of employee assistance programmes or provision of mental health and wellbeing apps, but most importantly, by offering a culture where employees feel able to talk about mental health without fear of discrimination or judgement. To help create that culture, companies should consider training that equips line managers with key skills to recognise when their team members may need support.

Dr Doug Wright, Medical Director at Aviva UK Health, comments: “The relationship between debt and mental health is long established, but in these challenging times, employers need to be closely attuned to their employees’ financial wellbeing, signposting help for those who need it but are unsure of where to find it.

“Being financially responsible does not necessarily guarantee stability – even for people who are experienced with budgeting, the current cost of living crisis is presenting new challenges to their personal finances. Employers should look to offer support that bolsters employees’ confidence, as well as offering practical solutions that appeal to their full breadth of employees.

“Workplace education campaigns about personal finances, including credit ratings and budgeting, can be a great way of helping people feel more secure with their monthly pay cheques. Aviva’s learning portal provides seminars on a range of financial topics. Tools that foster an open environment where those in debt know that they can raise their concerns with their line manager, or access services like debt counselling through the business, are equally important.”



Research among 2,000 UK employees working in organisations with over 1,000 employees was conducted independently on behalf of Aviva by Quadrangle in February 2020, August 2020, March 2021 and June 2022. Not all figures add up to 100% as figures have been rounded throughout the report.


1 The latest wave of research for Age of Ambiguity was carried out in June 2022.

Media Enquiries

Fiona Whytock

Retirement, Savings and Investments

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