Those most likely to indicate a worsening in their financial security include:
- those whose household income is less than £20,000 a year – three fifths (60%) of low earners say their situation has declined while just three in ten (31%) of those getting £60,000 or more say the same;
- people working in Scotland – over half (53%) of those based in Scotland report a slump in their financial wellbeing;
- those with a disability – almost half (48%) say it’s got worse, by contrast just over one-third of non-disabled people (35%) say the same;
- female workers – over two fifths (44%) reported it becoming worse, by contrast just over one third (35%) of men say the same. Alarmingly, they are most likely to report that their financial safety has gotten much worse (17%) than men (9%); and
- private-sector workers – over two fifths (43%) of people state a deterioration, this proportion jumps to three fifths (60%) for those employed in the hospitality sector.
The CIPD has since carried out a similar employee survey in both May and June and is planning to do so in both July and August, so it will be interesting to see how these findings change over time. You can look up the latest survey data here.
CIPD’s research from 2017
While the economic impact of Covid-19 is having a negative impact on the financial wellbeing of the workforce, the question is whether this is something that organisations should be concerned about?
The CIPD believes that they should. Research that the CIPD published in 2017 finds that for employees, money worries can result in: physical fatigue due to lack of sleep; difficulty in keeping a focus at work; spending time dealing with financial problems, both during and outside of the working day; and poor health.
The same research also found that one in four employees responding said that money concerns had affected their ability to do their job. For employers, this has implications for productivity, customer service, innovation and, ultimately, the bottom line.
The financial health of employees can also impact on how an organisation is viewed by its external stakeholders, such as its customers, future employees, investors, its media and politicians. For instance, there have been calls for an increase in the pay of key and essential workers. Many of these roles are low-paid and there is a belief that given the important jobs they do; these people should be able to earn enough to give them a sense of financial security.
CIPD’s April 2020 survey
Another CIPD survey, carried out in April 2020, asked almost 1,200 employers which three concerns, if any, were most commonly reported by employees as a result of the coronavirus pandemic? The most common responses, which were given by organisations were:
- Fear and anxiety about themselves or loved ones becoming ill (50%)
- Negative impact of isolation and loneliness on their mental wellbeing (36%)
- Financial worries causing stress (32%)
- Fear of being made redundant (31%)
- Poor work-life balance due to homeworking, such as difficulty balancing work and childcare (24%)
- Increased stress due to new demands or challenges from homeworking (24%)
While financial concerns are already an issue for around one-third of employers (among employers in the private sector this proportion is even higher at two fifths), this proportion could rise if the situation gets worse, such as for those returning to work from furlough who have been on less than full pay, who have needed to cut their working hours due to caring responsibilities, and in households where a partner is receiving less pay or has been made redundant.
Who’s responsible?
Employers have a role in improving employee financial wellbeing, but it is important to recognise that other parties also have a responsibility, such as the Government, financial services and employees themselves. In terms of what employers can do, in 2017, when we asked employees: what is important to your financial wellbeing? we found that paying them enough and paying them fairly was mentioned irrespective of age, gender, grade, etc.
So, if nothing else, organisations should focus on these two issues. Paying a liveable wage will have cost implications. However, if we concentrate on improving employee performance through job, work and organisational redesign then greater productivity can help pay for these higher wages. In addition, boosting the pay of low-paid workers can have benefits for the organisation, according to research form the Living wage Foundation, such as improving relations between staff and management.
In theory, paying people fairly should not have cost implications. However, most employers are not starting anew, and so reward professionals will need to audit past wage decisions and outcomes to check whether there are any problems that need fixing before they start talking both internally and externally about being a fair employer.
When the organisation is ready to start talking, people professionals will need to persuade it to invest in communication skills, especially if line managers are to have a role in communicating about what’s on offer in terms of pay, benefits and non-financial reward, and what staff need to do to get that.Other important elements of a workplace financial wellbeing package include helping people to save for the future and manage their debts, offering them benefits that protect them against risk (such as becoming too ill or infirm to work, either temporarily or permanently), and assisting them to become more financially literate. More information can be found on our website.
However, it is worth noting that there has been an increase in financial scams since the outbreak of the Coronavirus, and there is an opportunity for HR in warning staff that these are going on and that they should to careful when making financial choices. Also, if employees are more alert to the possibility of financial scams when making decisions about their own money, they may also become more alert when making decisions with their employer’s money.
However, there’s a challenge. The CIPD’s April poll of employers finds that just 32% of them have a policy with a budget providing financial wellbeing support to staff, though another 11% plan to introduce one by the end of July.
But there is also an opportunity: most parts of an employee financial wellbeing strategy are already there, such as paying people or providing them with benefits. People professionals just need to check what is already being provided by their organisation, make sure what is being provided is fit for purpose, filling in anything that’s missing, and bring everything together as its employee value proposition.
However, once we have created our offering, we also need to assess it regularly and adapt it as necessary. By adopting a strategic approach, we can help both our people and employers better navigate the twin challenges of Covid-19 and an economic hit.
