COVID-19 has caused more than a healthcare crisis, it has triggered an enormous economic crisis across the world. This economic disruption has not only affected companies and organizations, but also individuals.
While research by insurance company Aviva and business wellbeing specialists Robertson Cooper found that 41% of UK employees found it easier to save during the pandemic, and 39% had seen a decrease in their total debt in the last 12 months, 57% also noted they were only just getting by financially.
This financial uncertainty is also having a huge impact on employee mental wellbeing. Some 39% of 2,000 UK employees surveyed said the current financial situation was negatively impacting their mental health. While 26% noted their current level of debt was detrimental to their wellbeing and were concerned about their future financial wellbeing.
Aviva’s report, titled ‘Thriving in the Age of Ambiguity’, also noted that employees do not feel like they are in control of their finances. Some 60% of those surveyed stated their finances control their lives; rising to 83% for Gen X, and 71% for Gen Y.
Further to this, 24% said they made a bad decision about debt in the past year – this rose to 51% for Gen Z (individuals aged between 18 and 24) and 26% for Gen Y (25- to 39-year-olds). While 29% said they had had to borrow some money to replace lost income in the pandemic and 30% are concerned that their money will run out.
What should employers do?
Although we are hopefully moving out of the healthcare crisis elements of the COVID-19 pandemic – thanks to vaccines – the economic shocks of COVID-19 are far from over.
In the UK, for example, companies and employees are preparing for significant disruption when the furlough scheme comes to an end in September.
Aviva head of workplace savings and retirement Laura Stewart-Smith said: “Our report shows many trends which have been gathering pace in recent years have now reached an inflection point, as new preferences emerge to shape the way we work, feel, think and plan ahead.
“Financial education in the workplace is nothing new, but now more than ever, there is a fundamental need for employers to provide tailored support for employees to ensure they can genuinely thrive in the ‘Age of Ambiguity’.”
Aviva’s report found that personality type was a crucial indicator of financial wellbeing. This is because those with poor financial wellbeing did not think they were bad with money, thereby suggesting that money worries did not arise from disorganization and a lack of financial worries.
Therefore, Aviva recommends that employers offer personalized support to their employees based on their personality type.
However, Aviva does recognize this is much easier said than done. “Employers and managers can kick-start tailored support by personalizing conversations with employees and using discussion to create a rounded wellbeing support package that is best suited to their mindset and behavioral patterns,” says the report. The idea is that this helps drive employee resilience to ambiguity and supports their emotional wellbeing.
To achieve this, employers need to adjust their company culture to being more top-down and focused on their duty of care to employees.
Linked to this, Aviva calls on employers to provide personalized and individualized financial education to their staff.
“Providing information in accessible and manageable chunks through a variety of channels and creating a ‘safe space’ where even the most basic support can be discussed is the first step to a more personalized approach,” notes the report.
This also makes it easier for employees to feel like they can ask any questions, no matter how basic, without judgement and therefore take control of their financial wellbeing.
Financial education is particularly important in terms of pensions. Aviva’s report found that 22% of UK employees do not know what good looks like when it comes to pension savings – this rises to 40% for Gen Z. While 59% would be open to receiving support from their employers about pension planning.
To ensure that their employees can look forward to a minimum standard of retirement, Aviva calls on employers to go above and beyond the legal minimum and offer a living workplace pension.
Similar to the living wage, this accreditation “would give employees confidence that they work for an employer who will help provide for their future wellbeing, as well as their immediate needs”.