A quick summary:
- A third of employees living payday to payday
- The consequences of employee financial stress
- Using tools and resources like Heka
As we enter July, there’s one topic on the minds of everyone both in and outside the workplace – the cost of living crisis. In just about every industry people are beginning to feel the pinch of skyrocketing prices. What do leaders need to know about employee financial stress? How can leaders respond effectively to financial stress in the workplace? Let’s take a look…
Below, we’re going to walk you through a study by Willis Towers Watson. One that has revealed the shocking reality of these uncertain times. We’ll then discuss the various implications of employees living payday to payday. A vicious circle that nobody wants to fall into, especially as inflation and the cost of living continue to soar to new heights in 2022.
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A third of employees live payday to payday in 2022
In January, Willis Towers Watson carried out a study of around 4,000+ employees in the UK. And while the study revealed some staggering truths about both the cost of living, it couldn’t have anticipated the record-high impacts of rising prices.
According to WTW, 36% of employees were living payday to payday, leaving little to no spare cash in case of emergencies. Not only can this be detrimental (given the fluctuating price increases we’ve seen in just the past several weeks), but it can leave people in a permanent state of worry.
What’s more, the data reveals that 26% said they were struggling financially. As this data was recorded in January, we can only imagine how much worse the situation must be for some people in June and July. And after a global pandemic and a recession on the horizon, 44% of employees stated suffering from some form of a financial shock in the past two years.
Employee financial stress has clearly been on the rise in the past couple of years, and with redundancies, long-term furlough and more, it’s clear to see where these financial shocks have come from. Now, as we move into a post-pandemic world, the economy is struggling to bounce back, causing financial stress in the workplace is increasing.
Similar read: How to receive employee benefits advice from your workforce
What are the consequences of employees living payday to payday?
Willis Towers Watson’s financial report shows us that times are getting harder for people. Employee financial stress is on the rise, and the consequences can be heavily damaging.
Below, we’ll take a look at more of the data and dive into some of the repercussions of employee financial stress. This should show leaders that without action, hurdles and obstacles are likely to occur.
As reported by People Management, those suffering from financial struggle are more likely to act on destructive behaviours. This includes things like poor diets smoking and excessive alcohol consumption.
Ultimately, bad habits and poor health choices can be associated with the stress and worry of financial difficulty. However, when these decisions and behaviours can have a knock-on effect to our professional lives.
For instance, if employee financial stress increases due to living payday to payday, employees may be prone to excessive alcohol consumption. This could become a serious addiction, resulting in poor health and wellbeing and workplace performance. As we all know, poor health and wellbeing influences our output and success in the workplace. These self-destructive behaviours can become decision-making in our aim to succeed.
Feelings of anxiety, depression and loneliness
It isn’t just self-destructive behaviours that can impact on employees. According to the report, 63% of respondents who state living payday to payday also suffer from anxiety or depression.
It’s no secret that poor financial wellbeing can lead to feelings of stress, anxiety or depression. A lack of financial stability leads to uncertainty for the future – a circumstance that can drive anxiety and depression.
However, that’s not all, the report also found that 27% of those living by paycheque experienced loneliness. These kinds of negative emotions can responsible for a lot of poor wellbeing in the workplace. Think absenteeism and presenteeism. Two occurrences in which employees attend work with little output or productivity, or avoid work completely.
Poor retention and loss of great talent
Finally, let’s discuss retention and loss of great talent. When people are unhappy in the workplace, it’s often due to one of the following reasons; lack of opportunities and development, poor salary, toxic workplace environment or general unhappiness with the role, company or leadership.
Of course, the list goes on, but these above reasons are mainly to blame. Those living payday to payday will likely begin looking elsewhere for work. And not necessarily because they dislike any part of their job but the salary on offer. This is a huge blow for any business, because happy employees general thrive. However, it is is simply the wage offered, it could be the difference between retaining a great employee and losing them.
In workplaces plagued with employees living payday to payday, it’s no wonder they see high turnover rates. People need more than to simply pay the bills. Over time people will seek out better opportunities, even if it means leaving a job they love.
Using tools and resources like Heka
So, what’s the solution? According to Willis Towers Watson report, around 50% of those struggling with their financial circumstances believed the tools and resources on offer from employers improved their situation.
This drove 42% to say that financial apps and resources should become a part of their employers strategy. Employees understand the difference apps, tools and resources can make, which is why we want to tell you about Heka.
Heka is an employee wellbeing platform offers to thousands of employees. It puts health and wellbeing back in the power of employees through a personalised experience. From mental health, outdoor activities, learning and development and many more, employees are given a monthly allowance to spend on whatever they like.
Take a look at what some of our customers say here. Alternatively, find out more about Heka by arranging a demo with our wellbeing experts.