Chieu Cao, CEO of Mintago, explains why leaders need to offer financial wellbeing support to employees enduring a cost of living crisis

It’s no secret that the economic climate of the past year or so has posed immense challenges for both employers and employees alike.

For businesses, sky high inflation has meant that it has been incredibly challenging to maintain profit margins without passing the cost of rising prices onto their customers, while sales have taken a hit from diminished consumer spending power as well. However, this should not – and cannot – distract employers, HR managers, and decision-makers from ignoring one of the key facets of their business: the wellbeing of their staff.

At present, however, the wellbeing of Britain’s employees is not being looked after as well as it needs to be, particularly from a financial point of view.

Businesses aren’t doing enough

Indeed, according to Mintago’s recent research, two-fifths of Britons are either ‘very stressed’ (9%) or ‘somewhat stressed’ (39%) in the current climate, with the cost-of-living crisis cited as the primary stress factor for 62% of respondents. Among lower paid workers (i.e. earning less than £30,000), this figure rises to 69%.

Despite this, just 36% of employees say that their employers have initiatives in place that are
designed to improve the financial wellbeing of staff, while just 38% of employees say that they have the tools, guidance and advice available through their employer to manage their day-to-day finances effectively.

Of course, this cannot be said of all businesses, but even those that are providing support are not having the meaningful impact that they might intend. It was encouraging to find that almost a third (29%) of people had received support from their employers that had improved their financial situation.However, the fact that 71% had received support that had made no difference, is extremely worrying.

Lower income staff are bearing the brunt

More worrying, however, are the divergences in responses by salary bands, which show that lower paid workers are not only bearing the brunt of the cost-of-living crisis but are also receiving the least amount of support.

Indeed, despite the fact that 55% of those earning more than £50,001 said that their employer was doing enough to support staff during the crisis, less than a quarter (24%) of employees earning less than £30k said the same; make no mistake, this will be having an extremely negative impact on the current mental and financial wellbeing of lower income workers.
To make matters worse, it also appears that employers are not doing enough to help their lower income employees plan for their long-term future effectively. Indeed, while 58% of those earning more than £30,001 indicated that they had the tools in place for future financial planning, just 24% of those earning less responded in the same way.

As such, even if the detrimental short-term effects of the cost-of-living crisis were solved tomorrow, it’s unlikely that lower paid staff would receive the support that they need to remain financially well in the long-term.

The knock-on effects of a lack of support

This lack of support will have a terrible knock-on effect on the mental and financial health of a businesses’ employees, which can infiltrate many other aspects of their lives.

For instance, financial stress and anxiety can directly impact an employee’s ability to do their job effectively. In fact, our data reveals that stress and anxiety have a negative impact on 49% of Britons’ job performance, a worrying statistic given that more than half (51%) of people said their stress and anxiety levels have increased because of the cost-of-living crisis.

Coinciding with this is a lack of employee confidence in their employer to help them, which could have an incredibly detrimental effect on a businesses’ staff retention rate. For example, 24% of people feel their peers and friends receive better support than they do, while a staggering 68% don’t think that their employer cares about their financial wellbeing at all.

As a result, two-fifths (44%) of people say they would leave their current roles to work for an
employer that provides better financial wellbeing support, and almost a third (30%) say that they intend to move jobs in the next 12 months.

How to better support staff

Evidently, businesses must improve the support that they are providing their staff. However, as mentioned above, the current climate will also be impacting the finances of many employers, so implementing pay rises may not be a viable option. Moreover, each employee will have their own individual needs, so a blanket-policy approach cannot be taken. So, how else could businesses provide support?

One way is to increase the financial advice that is available to staff, such as financial advisers. By connecting employees with IFAs that can provide independent and unbiased advice about their unique financial situations, businesses will be helping their staff plan their financial lives more effectively and navigate the cost-of-living crisis with greater confidence.

Elsewhere, businesses could provide educational materials that will help employees improve their money management skills and financial literacy individually. In doing so, businesses would not only be helping them meet their short-term financial obligations more easily, but they can also help them to ensure their financial wellbeing in the long-term.

To support their long-term financial needs, implementing an all-inclusive pension dashboard can also improve an employee’s ability to maintain their financial wellbeing throughout their lives. Indeed, by enabling staff to manage their pension more effectively, and even track down any former pension pots that they may not have been aware of, businesses could significantly improve the financial wellbeing of their workforce.

Final thoughts

By improving the financial wellbeing support initiatives that businesses provide their staff with, employers can look forward to alleviating much of the financial stress and anxiety that countless employees are struggling with during the cost-of-living crisis. As a result, employers can maintain a happier, more productive workplace in the months and years to come.