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The True Cost of Christmas.

ForewordChristmas is supposed to be a time for joy and celebration, but at what cost? It’s perhaps the most demanding time of the year f inancially as every one of us is encouraged to spend our earnings across a sustained period – f rom early Christmas shopping endeavours to Christmas social events, gifts for family, f riends and co-workers, transport, decorations, food and more. In 2018 Hastee revealed that the cost of Christmas leaves workers five times more likely to use high-cost credit in January compared to December. What became clear was that workers across all salary levels lack the financial education and support they require to get through the most financially demanding time of year without borrowing from high-cost credit sources and putting themselves into debt. This year we decided to repeat the survey and felt it would be important to also focus on the impact that Christmas-related f inancial stress has on people while they are at work. With the UK in its current productivity slump1, it’s important for employers to understand the factors

Research methodology

This survey was completed by 1000 adults in full and part time work across the UK and Ireland. The fieldwork was completed in November 2019. The margin of error is +/- 3.1%.

1. https://www.bbc.co.uk/news/business-49971853

that impact productivity – in this case, f inancial stress.This year’s round of research will take a reading on workers’ financial wellbeing throughout the Christmas period and will also examine the wider impacts of Christmas spending, including: how the closure of payday lenders impacts peoples' ability to manage their cashflow around Christmas; how long the financial impact of Christmas spending lasts; and what kind of measures people have to take to make sure they can afford to give their loved ones a happy Christmas. We hope the findings revealed in this report will help employers understand the financial challenges their workers face and the impact those challenges have on workplace productivity.

James Herbert, CEO, Hastee

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The cost of Christmas forces the majority of workers to borrow money they don’t have.

71% say they have to borrow to help them cover the costs the festive season brings, while 61% say the financial stress

that Christmas brings impacts their performance at work.

So how are workers funding their Christmas spending? Nearly half of workers use high-cost credit options such as credit cards, overdrafts and payday loans. Worryingly, more than half (53%) of workers say Christmas spending forces them to live beyond their means.

Sadly, 35% of workers say the struggle to cover Christmas costs often leaves them

unable to the pay bills.

Payday loans have been a popular option for workers seeking to fill a gap in their liquidity and the collapse of payday lenders including QuickQuid and Wonga has left 41% of workers feeling worried over how to afford Christmas.

Festive stress putting productivity in decline.

It’s also evident that workers feel an obligation to spend money they don’t have at Christmas and this is forcing many to borrow from high-cost credit sources, accumulating debt that many feel they cannot afford. Many have seen payday loans as their preferred solution but with the recent collapse of major payday lenders, workers could experience increased stress levels through not knowing where to turn to access additional funds. This could lead to workers borrowing from other high-cost credit sources, untrusted lenders or lenders that offer unrealistic terms.

Employers that can provide financial support and help workers increase their financial education can ensure each worker is rightfully able to enjoy the Christmas period free from financial stress and that their workplace performance does not suffer.

71%say they have to borrow to help them cover the

costs.

35% of workers say the struggle to

cover Christmas often leaves them unable to pay bills.

It’s clear there is a direct link between the

financial stress that comes with

the festive period and workplace

productivity.

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I struggle to maintain a good relationship with my colleagues.

8%

I don't feel stressed due to finances.

15%

My financial stress doesn't impact my

work life.

16%

I am often late to work.

11%

I spend time during working hours

trying to sort out my finances.

23%

I feel anxious / stressed most of

the time.

38%

It has an impact on my performance

at work.

16%

I have difficulty concentrating.

28%

I feel on the edge mentally / physically.

27%

Festive stress putting productivity in decline.

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It’s no secret that Christmas is a financially demanding time but it’s surprising to note that:

61% of workers across all salary levels worry about how they’re going to pay

for Christmas.

It’s not just lower paid workers but also those earning higher salaries who feel anxious over the cost of Christmas. Workers would benefit from having options to choose from beyond high-cost lenders. Options that improve liquidity and

remove the requirement to borrow can improve wellbeing and increase

productivity.

68% of savvy workers try to spread the cost by buying gifts before December to evenly spread the costs compared a rise to 62% last year but there are still some substantial sacrif ices being made to cover the costs of Christmas. Sadly, nearly a third (32%) of workers say they haven’t celebrated Christmas at least once when they felt they couldn’t afford it. This could come down to making a choice between borrowing money to be able to enjoy Christmas and preferring to ignore Christmas altogether to avoid the f inancial repercussions. Some may choose not to celebrate Christmas because they are already struggling with debt and can’t afford further borrowing. 63% of workers have had to cut back on day to day living expenses to afford Christmas while 74% have cut back on social spending to help cover the costs.

Christmas thrift: The sacrifices workers make to pay for Christmas.

Shockingly, half of workers have cut back on home comforts – including turning the

heating off – to help fund the festive period.

More than 41% of workers have chosen not to buy presents for their partners so they could afford to buy presents for the kids. More than half (55%) have worked overtime to save extra money for the Christmas period – a rise from 48% of respondents who said the same in 2018. Working overtime is more common among younger workers, those earning lower salaries and those paid weekly which suggests they would rather work extra hours if it means having to borrow less. However, this kind of presenteeism can be bad for productivity. Spending more time at work doesn’t necessarily mean more is being achieved because workers aren’t getting as much rest as they’re used to and subsequently performance levels can decline.

Its clear workers have identif ied various ways of being able to afford Christmas, but in many cases they could be putting themselves under more strain. Again, this kind of presenteeism can result in additional strain and contribute to fatigue and burnout, further impacting workplace performance and productivity. Sacrif icing social lives, cutting back on home comforts and working more hours could also mean workers experience a poorer work-life balance which can add to stress levels and put strain on relationships at work.

61% of workers across all

salary levels worry about how they’re

going to pay for Christmas.

50%of workers have

cut back on home comforts – including turning the heating

off – to help fund the festive period.

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Nearly half (48%) of employers offer what they believe is additional financial support during the Christmas period. Yet workers struggle with their f inances all year round.

In our Workplace Wellbeing Study 2019, we uncovered that only 21% of workers

across all salary levels are able to budget and live within their means and that 82%

source additional funds between pay days.

To support workforce wellbeing and productivity companies need to think about how they can help to support workers f inancially throughout the year.

Nearly a third (32%) of businesses pay workers early before Christmas.

While employers may think this eases the burden, in reality it’s less of a blessing and more of a curse for workers as many will be waiting up to six weeks to receive their January pay. While this is meant to make Christmas easier for workers, it makes things harder in the new year, increasing financial stress which can then have a knock-on effect on workplace performance. Less than half (42%) of workers organise a festive party, only a quarter give Christmas bonuses or incentives and less than a quarter (24%) give workers a Christmas gift. Nearly a fifth (16%) don’t offer any kind of Christmas to show their workers gratitude. This could negatively impact morale and in turn this can result in poor productivity. Implementing a financial wellbeing benefit that provides workers with

How do employers currently help and what more can be done?

much-needed liquidity all year round and costs the business nothing is one alternative that employers can consider to show gratitude, improve morale and support productivity.

This means doing more than simply putting on a Christmas party, giving each employee a token gift or organising a secret Santa event. Given the financial struggle that workers go through at Christmas time, more needs to be done. Nearly a third of employers try to help out by bringing pay day forward in December, but this actually makes workers worse off…

32%of businesses pay

workers early before Christmas.

Only 21%of workers across all salary levels are able

to budget and live within their means.

To attract, retain and get the best

productivity from workers, companies

need to become, and act like, destination

employers.

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Workers aren’t just cutting back on spending to help cover the cost of Christmas. With many resorting to borrowing from high-cost credit sources, the financial impact of the festive period can last long after Christmas has finished.

The majority (82%) of workers say early pay in December leaves them in financial

difficulty in January

While 78% have had to use some form of credit in the New Year because Christmas left them short of funds. More than half (56%) have had to use high-cost credit such as credit cards, overdrafts or payday loans in the new year because Christmas left them short of funds.

The lasting toll of festive spending.

The majority of workers admitting they still feel the f inancial repercussions of Christmas spending more than 3 months later reveals the long lasting impact workers have to deal with and once again highlights the need for greater liquidity. Taking this long to f inancially recover f rom Christmas could be seriously impacting their ability to strike a satisfactory work-life balance that would help them work to the best of their abilities.

32%of businesses pay

workers early before Christmas.

82%of workers say early

pay in December leaves them in

financial difficulty in January.

Workers are nearly six times (5.8)

more likely to use high-cost credit in

January compared to December.

Sustained financial stress is poor for wellbeing but a

financial wellbeing solution that helps

workers manage their money better all year round would help to

diminish those stress levels.

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More than twelve months.

1%

Up to twelve months.

1%

Up to six months.

4%

Up to one month.

36%

Up to three months.

23%

A couple of days.

11%

A couple of weeks.

24%

The financial impact of this borrowing is long lasting.

Every worker deserves to enjoy a fulfilling Christmas just as much as an employer deserves great results from the people on its payroll. Sadly, financial stress is a blocker to both of these.

Workers openly admit that financial stress impacts their performance at work and that the cost of Christmas contributes

significantly to that stress.

Worryingly, 16% of employers do nothing to help their workers out or even treat them at Christmas time. And those that do help employees out with early pay before Christmas are unwittingly adding to workers’ financial woes in the new year. It’s a sorry state of affairs for all parties. The fact that workers still feel the financial impact of Christmas months later highlights that something is seriously wrong. A lack of liquidity means that by spending borrowed money – not just at Christmas

but all year round – many workers are putting themselves into dire financial situations just to be able to celebrate Christmas along with everybody else.

Conclusion.Others are having to endure diminished home comforts, social lives and day to day item just to take part in the festive season. For some, it comes down to choosing whether to celebrate or just give Christmas a miss until they’re in a more stable situation f inancially. These aren’t choices workers should be having to make in 2019.

Increased liquidity and better f inancial education will give workers the opportunity to balance their incomings with their outgoings more effectively when money management becomes a struggle – a year-round struggle for many. This is exactly what Hastee delivers – f inancial f reedom for workers and increased productivity for employers through earnings on demand. By providing workers with on demand access to a portion of their earned pay immediately, as well as access to a free financial education hub, we provide a safe, ethical alternative to borrowing to get by. When faced with increased financial demands, workers can use their own money instead of forfeiting their financial wellbeing on high-cost credit options.

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Workers openly admit that financial stress impacts their

performance at work and that the cost of

Christmas contributes significantly to

that stress.

In turn, employers can increase productivity

and retention and attract more talent by

reducing financial stress and improving wellbeing

through increased financial freedom.

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