In fact, as recently as 2019, 2.46 million Brits were listed as being Dollar millionaires, while at the same time, 280,000 vulnerable people lived homeless on England’s streets. What is new, however, is the growing level of financial divide within organisations themselves. The Office for National Statistics warns that there are ‘signs of increasing economic inequality’ in light of the COVID-19 health crisis.
The great Covid divide
While the global health crisis has been devastating to everyone, there’s a grey area when it comes to the financial impact. Not everyone has had the same experience.
On the one hand, a quarter of Brits have reported feeling concerned or even negative about their pandemic finances, with those in the hardest hit industries of retail and hospitality bearing the brunt. A combination of furlough, redundancies in the family, loss of casual income sources, and unexpected outgoings such as children’s school supplies has resulted in many feeling anxious about their income and their financial security.
Although initiatives have been put in place to alleviate some of the financial stress, many are simply putting plasters over the problem. Mortgage holidays, for example, are short term fixes. 2.5 million households have taken a mortgage holiday since March 2020 for temporary relief, but are facing larger repayments as interest continues to accrue.
On the other hand, some have become ‘accidental savers’; those that are hundreds of Pounds better off per month as they’ve been able to cancel their travel passes; those that are cooking more at home during restaurant closures; those that are enjoying staycations in the garden rather than holidaying on the beaches of the Caribbean. Over a period of just 13 weeks in lockdown, 60,000 applications for extensions and home conversions were made by those experiencing a surge in financial assets.
What does this mean for employers?
Employers are dealing with an inter-organisational financial divide greater than ever before. There’s no such thing as an even playing field in the post-COVID landscape, and employers are finding that while some are financially thriving, others are struggling.
Recent reports by Feeding Britain and Independent Food Aid show that interest from ‘middle income’ families is on the rise. Feeding Britain’s National Director Andrew Forsey notes that ‘we now see families at food banks who before the pandemic were able to pay their bills and still be comfortable enough to put food on the table. For the first time in many years that is no longer the case’. At the same time, others are saving more.
And regardless of what side of the coin an employee falls on, it’s a very difficult, challenging, and sensitive situation for all involved. There is a very definite and notable link between financial inequality and mental health. Those struggling are feeling anxious, while those faring better often report feeling ‘guilty about splashing out’.
There is a clear and urgent need for employers to introduce improved financial support for their employees in a new bid to boost wellbeing within the workplace and ensure business continuity with a team of happy, satisfied, and resilient workers who feel well supported in their role during challenging times. An employer commitment to improve financial wellbeing is one of the many contributors to mental health in the workplace.
It's now time for employers to step up and expand their financial wellbeing proposition, helping employees to feel better about their financial situation, whatever that situation may be. Along with increasingly popular mental health provisions, financial wellbeing should also be at the top of an employer's agenda in the post-pandemic landscape.
Employers that are keen to support their workforce during this challenging time should be looking into smart solutions in digital financial guidance and advice; solutions that enable employers to understand, take action, and improve financial wellbeing for everyone, regardless of their current circumstances, situation, or savings status.
The answer is jargon-free financial advice technology that facilitates financial wellbeing through insights and data analytics that help employees manage their finances with confidence and plan for the future. Comprehensive technologies cover a broad area, including advice relating to investments, pensions, and planning for retirement.
Given the growing financial divide across the workforce, these technologies shouldn’t be an anomaly; they should become a standard part of the employee benefits programme. After all, what employees want from a benefits programme is changing.
In a landscape where remote working is fast becoming the norm, employees are less likely to be attracted to or engaged by vehicle or child care salary sacrifice schemes, or cycle to work schemes. Instead, they’re looking for benefits that can help provide them with greater knowledge and confidence, and help boost financial resilience.