A new report has warned that urgent action is required to prevent the danger of ‘financial and mental trauma’ among employees due to the coronavirus crisis and the looming recession.
While the Chancellor Rishi Sunak’s furlough scheme has been a huge lifeline for businesses and employees and has helped the economy, Sir Cary Cooper, Professor of Organisational Psychology at Alliance Manchester Business School, said that it has imposed a huge financial and psychological burden on staff members.
This, according to Cooper, is because many people placed on furlough are only receiving 80% of their usual salary, and there are also mounting fears over redundancies when the scheme winds down in October.
Statista data from early August revealed that approximately 9.6million jobs from 1.2million employers were furloughed under the UK Government’s scheme.
So far, a considerable number of jobs have been lost and, earlier this week, the CIPD revealed that one-third of all UK-based employers are expected to slash jobs by October.
As such, Cooper has called for employers and line managers to take immediate action to prevent the danger of “financial and mental trauma”.
He explained: “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,” Cooper added.
According to the Financial Wellbeing Guide – which assessed the impact of the pandemic in intensifying employee financial stress and was done in conjunction with the National Forum for Health and Wellbeing at Work – financial concerns were already a leading cause of stress prior to the pandemic.
For example, 2019 research from the think tank Tomorrow’s Company found that more than six million people were in the ‘poverty zone’ – defined as those living less than ten per cent above or below the poverty line.
Yet, the new report revealed that these issues have increased for a number of different groups such as women, younger people, Black, Asian and minority ethnic groups and people with a disability.
Elsewhere, the data found that the pandemic will likely impact the financial wellbeing of those who have had to cut hours due to caring responsibilities, as well as households where a partner is earning less or has been made redundant.
“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.
“…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,” Cooper added.
Ensuring employee wellbeing in the workplace is crucial as it can directly boost the physical and mental health of the workforce.
HR leaders will be savvy to the idea that a healthier and happier workforce is more productive, which has huge benefits for business.
For example, research by Oxford University’s Saïd Business School, in collaboration with BT, found that workers are 13% more productive when they are happy.
Therefore, identifying signs of financial or mental trauma among staff before it is too late is key.
Cooper explained that a lack of mental wellbeing can be visible in several different forms, “from behavioural changes like being more withdrawn or overly aggressive to health-related problems including lack of sleep, over or under-eating, or mental health-related issues such as anxiety attacks and depression”.
To help HR leaders prevent financial and mental trauma from becoming a problem among the workforce, Cooper has shared three tips with HR Grapevine below.
“First, encourage staff to get advice from their employer or through an Employee Assistance Programme (EAP), or from an external financial advisor if the business has access to one.
“Secondly, if an employee does feel their financial wellbeing has been undermined, connect them with a councillor through your organisation’s EAP. If there are signs that an employee is suffering, encouraging them to speak to a GP is advisable too.
“And finally, encourage proactive financial planning – as we enter this recession, having conversations about this in the workplace more openly and regularly will certainly help,” Cooper concluded.
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