Businesses must step up to protect employees from the potential “financial and mental trauma” posed by Covid-19 and the looming recession, according to a new report published by the National Forum for Health and Wellbeing at Work and Alliance Manchester Business School (AMBS).
The warning from Professor Sir Cary Cooper – one of the UK’s leading organisational psychologists – comes after businesses were given more discretion by the government to urge employees to return to the office.
Chancellor Rishi Sunak’s furlough scheme, while crucial to minimising the impact of Covid-19 on the economy, has imposed a huge financial and psychological burden on employees, Sir Cary said, with many people earning only 80% of their normal salaries and fearing redundancy as the initiative is wound down by 31st October.
According to the report, Financial Wellbeing Guide, the pandemic has amplified inequalities across society and exacerbated financial worries related to life events such as divorce or separation, bereavement, illness, job loss, sudden financial loss or expenditure, gambling and other forms of addiction.
Prior to the Covid-19 outbreak, financial worries were already one of the leading causes of stress for people across the UK, with increasing numbers of people reporting stress due to money worries. Last year, four million people in work in the UK were living below the poverty line of £195 income per week for a single parent with two children. More than six million were in the ‘poverty zone’, defined as less than 10% above or below the poverty line, according to research by not-for-profit think tank Tomorrow’s Company.
The new report has shown that these issues have been intensified across a number of groups in particular, including women, younger people, black, Asian and minority ethnic groups, and people with disabilities. It follows research by Tomorrow’s Company, which has shown that 61% of all low paid employees in 2019 were women in sectors such as care, cashiering, catering, cleaning and clerical work.
The report, which was developed by AMBS and the National Forum, which comprises senior HR directors, chief medical officers and directors of health and wellbeing in large public and private sector bodies, shows the pandemic is also likely to impact the financial wellbeing of those who have had to cut their working hours due to caring responsibilities. It will also hit households where a partner is receiving a smaller wage or has been made redundant.
In response to the findings, Sir Cary, co-chair of the National Forum for Health and Wellbeing at Work and professor of organisational psychology and health at AMBS, has called for managers and organisations in every sector to take immediate action to prevent the danger of financial and wellbeing trauma among employees. He argues for financial wellbeing to urgently become one of the central pillars of employee wellbeing strategies and for greater investment in resources and tools to support employees across all sectors.
Sir Cary said: “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.
“Surveys have shown 43% of adults in the UK reported that their mental health had worsened since the start of the Covid-19 lockdown. This damage will be intensified when the government’s financial buffer begins to wind down in the coming months. We’re facing a surge of financial and mental trauma among employees on a shocking scale.
“There is a pressing need for every organisation to urgently step up and prioritise financial wellbeing among employees. It’s a myth that financial difficulties are an issue just for lower paid staff. Often, these issues are linked to other stigmatising circumstances, such as domestic violence and abuse. The lack of open discussion is a key issue in this, and it makes it more difficult to fully gauge the magnitude of the problem. Recession impacts those suffering from poor mental health the most and the consequences are often terrible.
“An immediate response by business leaders is needed to reverse the stigma surrounding the issue and to build accessible and comprehensive financial wellbeing strategies into the fabric of the workplace. This will be one crucial way to boost productivity and pave the way to economic recovery across the UK.”
To find out more, read the report here.