Is your financial wellbeing strategy up to date following the Covid-19 crisis?
With the Covid-19 crisis pushing financial wellbeing to the forefront of most employees’ minds, organisations should be making this issue an integral part of their employee wellbeing strategy right now.
At the start of this year, I wrote an article for HRZone about why 2020 should be the year that employers offer financial education. I thought it was time that employers really stepped up to support the financial wellbeing of their staff. Little did I know, just a few months later, this need would become more pressing that at any other point in living memory.
One in five people say that financial stress had a big impact on their mental health during the pandemic.
Wellbeing has fast become the number one area of the employee experience that employers want to invest in. An analysis of pre and post Coronavirus data reveals that employees are now more likely to say that their employers have a responsibility to help them with their wellbeing – particularly when it comes to their financial wellbeing. There has been an almost 10% increase in employees wanting more financial wellbeing support following the pandemic making it employees biggest wellbeing concern – well above mental, social and physical wellbeing.
As British households face an almost 20% drop in disposable income, the UK’s public debt is now larger than the entire economy for the first time in 60 years. As a result, two in five employees who work for large companies have reported an increase in financial anxiety and the under 30s are expected to bear the brunt of a recession. In the US, a massive 88% of Americans say Covid-19 is causing them financial stress.
Soon after lockdown was announced, the University of Sheffield found that depression and anxiety spiked and all over the country employees began to worry even more about their wellbeing. A quarter of people are more stressed about money than usual. One in five people say that financial stress has had a big impact on their mental health during the pandemic.
We’ve long known that there is a cyclical relationship between financial and emotional wellbeing. In June, the Money and Mental Health Policy Institute released a report on how the pandemic was affecting the living standards of those with a mental health problem. They found that people with experience of mental health problems are much more exposed to financial hardship as a result of the virus than the wider population. A third of people with mental health problems say they have had to cut back on basics like food and heating and have missed repayments on debt as a result of the virus.
The economic crisis brought about by the Coronavirus pandemic has made improving the financial literacy of employees more pressing. The Resolution Foundation has found that lower income households have turned to borrowing, while higher income households have increased their savings.
Employers can no longer have an effective wellbeing or mental health strategy that doesn’t heavily overlap with ways they can help employees with their financial situation.
The Coronavirus pandemic has also forced through money trends like contactless card payments, which will impact employee financial wellbeing. Less than half of UK payments are now made using cash. More than a third of the country hasn’t even touched the new £20 note as contactless payments became preferred throughout the pandemic. Cash is an easier and less complex option for most people. A number of studies have shown that when paying in cash, people have more control over their finances. When paying by card, however, people spend 100% more than they usually would and require a better understanding of things like credit, APR and card charges.
Employees are desperate to find out more about how they can better manage their money and understand the economy. News outlets have been reporting a significant uplift in views of financial news with consumers spending more time reading money articles than ever before. All over the world, people are turning to financial literacy to cope with the impact the virus has had on their finances.
Impact on employer brand
The court of public opinion has been in session throughout the pandemic, with consumers and employees taking to social media to openly criticise organisations who have failed to support the wellbeing of their people. As a result, more than half of employees say their employer did not show enough concern for their wellbeing during lockdown and 60% say they now feel inspired to work for an employer who looks after their people during ‘unprecedented times’.
Employers are taking action
As both employees and employers start to take financial wellbeing more seriously, we are seeing more positive actions being taken by both. The number of people seeking income protection has hit record highs as men and younger employees in particular start to realise the importance of protection. The pandemic has seen providers like LV= pay out more than £3.7m in Coronavirus claims showing how important this type of cover can be. The pandemic has also seen providers themselves turn to insurance as the pandemic leads people to think more about securing their financial situation as much as possible.
It’s no surprise that the realisation of how important employee wellbeing is and the demand from employees has seen rapid change to the employee benefits market. Following lockdown, it was reported that more than two thirds of organisations introduced new wellbeing benefits to support their staff.
Employers can no longer have an effective wellbeing or mental health strategy that doesn’t heavily overlap with ways they can help employees with their financial situation. The impact the virus has had on the economy will be with us for years, so investment in financial wellbeing is no longer just part of your workplace wellbeing strategy – it’s the epicentre.
Interested in this topic? Read Four ways to support employee financial wellbeing during the coronavirus outbreak.
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Gethin is a psychologist who has been helping some of the world’s largest organisations to improve their employee experience and wellbeing for almost two decades. The last 9 years have been spent working as part of the senior leadership team at Benefex.
As a frequent writer and speaker on employee experience and employee...