2020: Financial & Mental Trauma
In August The National Forum for Health and Wellbeing at Work published their Financial Wellbeing Guide. The guide looks at several aspects of financial wellbeing and its associated impact on mental health too. Of course the arrival of a global pandemic also features as a major new contributory factor to such concerns.
One of the authors of the report, Professor Sir Cary Cooper, said;
“Surveys have shown 43% of adults in the UK reported that their mental health had worsened since the start of the COVD-19 lockdown… we’re facing a surge of financial and mental trauma among employees on a shocking scale.”
This may well prove to be a sadly accurate assessment. Yet it’s not always easy for employers to identify which of their employees might be facing genuine financial hardship, particularly for those organisations that have been able to maintain jobs, pay levels, and working hours throughout lockdown.
Look beyond the employee
For the truth is that employee financial stress is often a result of a cumulative range of household financial pressures. This is particularly the case in 2020, when the nation is facing an unprecedented wave of salary reductions and/or job losses. Your employee might well have retained their own pre-crisis income level, but it doesn’t follow that their spouse, partner, or other income-producing family member has been so lucky. And the truth is that very few organisations will be easily able to identify such financial stresses based on their employment data alone.
Professor Carey again;
“Financial security is now, more than ever before, a crucial part of employee wellbeing. The impact the pandemic is having on the mental health of the UK workforce is seismic and we’ve only seen the tip of the iceberg so far. Work-related stress will soar with the onset of the financial recession and this will severely affect productivity across the UK.”
And right now very few organisations can afford anything less than 100% productivity from every single employee. Yet the reality is that a financially stressed employee is unlikely to be as focussed and engaged as their employer would want or expect them to be. This can lead to all sorts of workplace issues for the employer, including higher absence levels, poor workplace relationships, increased stress, poor mental health, and even higher staff attrition if the problem goes unresolved.
Finally, and not least, employers should recognise that extreme financial stress can have a negative impact on employee decision-making too. A pre-pandemic report from the Financial Inclusion Alliance states;
“A person’s cognitive function is diminished by the constant and all-consuming effort of coping with the immediate effects of having little money.”
And that report went on to suggest that people under financial pressures make mistakes that might otherwise be avoided. The report even went as far as to state;
“Experiments show that the impact of financial concerns on the cognitive function of low-income individuals were similar to a 13-point dip in IQ.”
Which suggests that mistakes in the workplace are also more likely if employers don’t find some way to support their employees in the area of financial wellbeing.
So both these reports suggest that financial stresses are bad for the employee and his/her family, and also very bad for the employer too. So as the nation looks to recover from the economic and emotional impact of the pandemic, it’s vital that employers in all sectors seek to provide some tangible support to workers on financial and mental health issues.
For more information on any of the above topics, please speak to your usual Howden Consultant in the first instance, or visit our website for other contact options. For the latest details on COVID-19 & Employee Benefits provision please visit our coronavirus hub.
Steve is Head of Benefits Strategy, Howden Employee Benefits & Wellbeing, and is an award-winning thought leader on Pensions, Employee Benefits, and Human Resources issues. He is occasionally accused of making Employee Benefits interesting.
More insights from the Employee Benefits and Wellbeing team
This article is one of many insightful opinion pieces.