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The effect that COVID-19 will have on employees’ financial wellbeing

By Angela Knox | Nov 12, 2020

COVID-19 has had a substantial impact on businesses in all sectors. With the UK in lockdown (now for a second time), many companies found themselves forced to close or cease operations.

However, it isn't only companies that have suffered. The pandemic has impacted most people in the country financially. This is particularly true for employees that feel financially uncertain as a result of being furloughed or made redundant.

Additionally, the pandemic has highlighted the need for preparation, something that many people took for granted previously.

For businesses that are continuing operations and have a better idea of the financial future ahead of them, focusing on the financial wellbeing of their employees as well as other health and wellbeing issues should be a priority.

The pandemic is likely to take a long time to recover from financially for many, with a recession looming.

Government support

Although the government has provided support to businesses, employees and the self-employed, many argue that this is not enough.

For those who have found themselves taking a pay-cut as a result of the pandemic, covering the costs of daily living can be difficult. This is especially true for low earners that rarely have much disposable income after paying their bills and expenses each month.

The pandemic has been a time of uncertainty and will likely be for years to come. Although government support has helped many, it is not unlimited. Businesses and employees will have to plan for their uncertain futures.

A time of uncertainty

With many companies relying on the government furlough scheme to cover the costs of their payroll, it is understandable why employees may feel uncertain about their financial futures.

Some employees have been forced to retire early, others have been assigned different roles with lower salaries.

Employers should be aware of this uncertainty and employ empathy, transparency and answers.

By providing support at a time when workers need it most, companies can help to alleviate worries and also possibly have a higher chance of retaining employees.

What the facts say

Money and Pensions Service (MAPS) anticipate an increase of 60% in those needing debt help by the end of 2021.

Research from Close Brothers suggests that many have had to rely on their savings during the lockdown, but many have also recognised the importance of personal financial management.

The study found that 50% of people surveyed planned to make changes to their finances as a result of the pandemic, and some already had.

The impact of the pandemic on financial wellbeing is evident in these findings, with 36% of people stating that they were now more concerned about their financial wellbeing than they were before COVID-19. This number is even greater in 18-24-year-olds, with 50% stating that the pandemic had made them worry more about their financial wellbeing.

Despite these desires to change, the research also found that 39% of male employees felt that they would feel confident budgeting and dealing with financial planning.

This highlights the need for additional help and support surrounding financial wellbeing for employees. This isn't the only impact that COVID-19 has had on employees - 46% of employees surveyed also claimed that they were worried about their mental health since the lockdown. This is likely also linked to financial concerns and worries about the future.

Employer responsibilities - providing support

To ease uncertainty among employees, employers should be clear and transparent with their employees. By doing this, employees will have a better understanding of how their financial future will look.

Although the government is assisting with the furlough scheme and helping some individuals with Universal Credit payments, there are still ways employers can assist their employees. It is important to recognise that as employers, there should be a sense of responsibility in regard to employee financial wellbeing.

Seeking advice from MAPS about how to assist employees can be a good way to do this. Many employees lack the knowledge to manage their finances successfully.

Employers can help to provide the resources needed to allow their workforce to feel in control of their finances following the COVID-19 pandemic. By doing this, employers not only improve company and employee relations but also may help to avoid employees having money issues and getting into debt as a result of the pandemic.

 

 

References:

Close Brothers employers financial wellbeing research

MAPS financial wellbeing in the workplace

Angela Knox

Angela Knox

I am a co-founder and director of Keep Fit Eat Fit Wellbeing Ltd and have come from a business and marketing background over many years, with a particular interest in everything to do with health, fitness and overall wellbeing. Having worked in offices for decades, I know the pitfalls of too much sitting at a desk, the challenges of fitting the gym around other commitments, and all the issues addressed within our website. The personal experiences of me and my partner Mark were the original inspiration for the concept of this website. Enjoy!