Financial wellbeing in Scotland

Even before the COVID–19 pandemic struck, communities in Scotland faced significant financial wellbeing challenges. Now the situation is even tougher. Scotland partnership manager Kevin Duffy explains why this means financial education and guidance is more critical than ever – not only for your workforce but also for the productivity of your organisation.

Currently, it’s thought that the equivalent of £15 billion of turnover is lost each year by organisations across the UK, due to employees taking days off because of financial stress (Neyber, 2019).

The Money and Pensions Service (MaPS) is here to help. Organisations in Scotland can connect with me to support the financial wellbeing of their employees, customers and communities. Employers can also signpost to our free, impartial guidance and embed our content for workers and customers.

Financial education in school and throughout life can play an absolutely vital role for your colleagues, customers and communities’ wellbeing, and helps to enhance your organisation’s objectives such as workforce efficiency and pension scheme uptake.

While 40% of children recall receiving financial education and finding it useful (MaPS, 2020), financial guidance shouldn’t begin and end at school. There is a role for parents and carers – as well as organisations that work with families – to improve children’s financial literacy and understanding, to instil financial wellbeing.

Measuring financial wellbeing is not as straightforward as considering one single figure. Instead, to understand Scotland’s general financial wellbeing, we need to look at a collection of different measures and challenges.

For example, the number of people at risk of problem debt, the proportion of people saving, the number of people borrowing to buy necessities, etc.

The following information provides some key indicators of financial wellness in Scotland:

• 700,000 people in Scotland are at risk of or in problem debt (that is, debt that a person struggles to repay or manage)
• only 54% of Scottish people save regularly
• 15% borrow to pay for food or bills
• the percentage of Scottish people in arrears on Council Tax rose from 36% in 2014 to 46% in 2018. (MaPS, 2020)

Scotland’s population is currently 5.4 million people. It’s estimated that around a fifth (17.3%) are under 16 years old, the majority (65.9%) are between 16 and 64, and the remaining 16.8% are 65 years old and over.

Of these people, 900,000 (17%) live in rural communities and can face unique challenges in accessing digital and physical resources. In turn, this influences the cost of goods and services, and ultimately impacts financial wellbeing. (Rural Scotland: key facts, 2018).

Offer personalised money guidance to your employees using our Money Navigator ToolOpens in a new window

Like most nations, Scotland has experienced significant setbacks due to the coronavirus outbreak.

Scottish businesses and workers have been forced to adapt to the ‘new normal’. This means a substantial proportion of people are now working from home, or have been furloughed under the Coronavirus Job Retention Scheme.

Many more have lost their jobs, and 70,000 people in Scotland are on zero-hours contracts (StepChange Debt Charity, 2020). Even among homeworkers, ‘digital exclusion’ means varying access to a comfortable workspace, reliable internet connection and essential hardware like laptops.

People may be feeling increasingly under pressure to cope with their commitments and start looking at cutting costs, whilst also trying to save and build financial resilience. Therefore, we expect to experience a significant spike in demand for money guidance and debt advice in the months and years to come.