Employees struggling with the skyrocketing cost of living are at higher risk of mental health issues, research shows, prompting employers to offer more financial literacy initiatives or direct support.
Two in three UK employees say money worries affect their mental health, while three in five say financial distress affects their performance at work, according to a survey by workplace savings provider Cushon.
As a result, the cost-of-living crisis presents a “double whammy” to productivity, says Steve Watson, Cushon’s chief proposal officer, because financial worries first affect an employee’s ability to do their job and can cause mental health issues, which can further hamper long-term effectiveness. Workers suffering from stress, anxiety and depression took an average of 21.6 sick days in the financial years 2019 to 2020, according to the UK Health and Safety Executive.
“We used to think about financial well-being and well-being separately, but now we need to see it more holistically,” says Watson. “Everything is connected.”
UK consumer price inflation soared to 9.1% in May, higher than any other G7 country and the highest in Britain for three decades. With soaring energy and food prices, many low-income people are forced to choose between heating their homes and eating.
And the problem may be more widespread than employers realize. According to a study by the Money and Mental Health Policy Institute think tank, more than half of UK adults say they feel anxious about rising prices, while one in five say they are unable to cope.
Money worries can also exacerbate existing health problems: the survey found that almost one in five people being treated for mental health problems missed a doctor’s appointment because they didn’t have the ways to get there.
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Conor Darcy, head of research and policy at Money and Mental Health, says people have told him they don’t shower or cook to save on energy costs, and he expects that The situation is getting worse as utility bills soar this winter and workers run out of savings. According to the Mental Health Foundation, one in 6.8 people experience mental health issues at work.
“We’re still hearing a lot of people who are on their way out, they’re using their savings, but maybe they’re turning to some credit now,” Darcy says.
In the United States, the relationship between financial worries and health may be even more direct – or like a “chicken and an egg”, according to Heather Odle-Dusseau, chair of the Department of Management at Gettysburg College, who has studied the impact of financial distress on workers. .
She says a study shows that health care bills were the main source of financial hardship, which in turn caused distress and mental and physical health problems. The second and third most common causes were job loss and student debt.
But, despite the obvious consequences for their employees, employers may be reluctant to intervene, fearing they will be faced with demands for higher wages.
Christian van Stolk, executive vice president of RAND Europe, who has studied the impact of financial interventions ranging from lessons in money management to paying advances, says they are no substitute for poor pay.
“You can’t just say our workers need to be more financially savvy if they have very low incomes, maybe supplemented with benefits,” he argues.
Other companies have been found to underestimate the problem, for example by assuming that higher income earners will have stronger financial literacy skills.
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A RAND Europe study, commissioned by the Wellcome Trust, analyzed data from two major workplace surveys, in Britain and Asia. Overall, she identified low rates of participation in financial wellness initiatives. But he found that, for those who engaged in the programs, their mental health improved. This was particularly the case for young people, people on low incomes and, in the case of the UK, people from ethnic minorities.
Other studies have shown that financial counseling and coaching can increase employee satisfaction with their situation and reduce loan requests in the workplace. Darcy says that, for those who already suffer from mental health issues, employers can help “direct” resources.
“It can seem pretty obvious sometimes when you say, ‘If you’re in financial difficulty, there are places you can go for help,'” he observes. “[But] when people are really struggling mentally, just find that effort for. . . figuring out where is the right place to go for information – and who can you trust – can be very difficult.
Employers can go further and intervene themselves. A 2010 study showed that payday advances reduced defaults. And, in the UK, Watson suggests that by turning employee pensions into a wage sacrifice arrangement, companies could put a few hundred pounds more back into workers’ pockets each year (figures for an employee earning £30,000). £).
He says a number of employers were also considering allowing people to divert part of their pension into savings to provide an emergency fund or home deposit, or encouraging automated savings by offering bonuses to those who save for several months.
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Van Stolk says the mental health crisis has gotten so bad that employers are investing just to stem the tide of problems.
“Most of the big employers I talk to right now are looking to stabilize mental health, so not even improve mental health, but stop the decline in mental health,” he notes.
But he adds that there is still a gap between low earners, who are rarely offered interventions, and higher earners, as well as between those working for big and small companies.
“Most employers are becoming more aware of these things and are taking action in these areas,” says Van Stolk. “But I would focus on small employers who often have very limited means.”