Firms support employee mental health damaged by money worries
As the cost-of-living crisis and economic downturn put increasing pressure on individuals, companies are looking for ways to lighten the mental burden on their staff
Financial wellbeing and mental health are inextricably linked: when one falters, the other is likely to follow. With the cost-of-living crisis and a recession increasingly likely, there are growing concerns of a potential nationwide mental-health epidemic.
A group of charity CEOs, which includes the chief executives of mental health charity Mind and the Samaritans, recently drew attention to this concern in a letter to the prime minister. They said that, despite significant attention being drawn to the cost-of-living crisis and the likelihood of a recession, “there has been no recognition of the risk this poses to the nation’s mental health”.
They added: “We know from previous experience that a squeeze on living standards, unmanageable debt and economic recessions cause a rise in mental health problems, demand for services and are, sadly, connected to a rise in suicides. We have the opportunity to learn from the past and address how to support people’s wellbeing to avoid repeating history.”
A survey earlier this year from the Money and Mental Health Policy Institute, which was founded by money-saving expert Martin Lewis, also shows the impact. It revealed that 59% of adults thought the cost-of-living crisis was having an adverse effect on their mental health, with one in five saying the pressure was so much they felt “unable to cope”.
But CEOs are aware of the economic challenges that employees face. Cook co-CEO Rosie Brown says: “Our starting point at the moment is a concern for our teams. People are being really badly hit by what’s going on.”
Similarly, Ipsos UK boss Kelly Beaver described it as “the biggest thing on her mind”, adding that if the company didn’t take “serious measures between now and next year, our staff will really struggle”. The research company has committed to giving staff three £100 vouchers for high-street stores to help them through the winter period.
Financial worries impact mental health
Unfortunately, the actions of prime minister Liz Truss and chancellor Kwasi Kwarteng have only added to people’s concerns. Despite featuring several policies to relieve financial pressure on individuals, including the cap on the unit cost of energy and scrapping the rise in national insurance, the fiscal event – nicknamed a ’mini budget’ – caused a plunge in the value of the pound and a sharp rise in the interest rates on gilts.
This resulted in the Bank of England intervening with a £65bn pledge to buy UK bonds and stabilise financial markets. But the mortgage industry has been hit, with lenders withdrawing thousands of products and the average cost of a two-year mortgage rising above 6% for the first time in 14 years.
The difficulties of the UK economy are clearly affecting individuals. The ONS said that 89% of British adults report a rise in living expenses. Similarly, there were more searches for the term ’savings account’ on Google last month than at any other point since 2004, as Britons looked for ways to save money.
Simon Bocca, founder and CEO of payrolling start-up PayCaptain, says: “Financial anxiety and mental health have an implicit link. One of the main reasons for absence from work at the moment is stress, which is often caused by financial anxiety.”
He adds: “That has a direct knock-on effect on productivity, absenteeism and staff retention. So that’s why it’s important that companies take this seriously and support their employees.”
Companies offering cost-of-living bonuses
One headline-grabbing solution that companies are offering is a ’cost-of-living bonus’ or one-off payment, to help employees through the more expensive winter months.
Online bank Monzo is one of the latest to offer a £1,000 payment for staff earning less than £40,000 a year. In the announcement on LinkedIn, company CEO TS Anil says: “There is a strong link between financial needs and mental health and, as a company, we’ve always cared deeply about mental health. We have a support network in place, which includes mental health first-aiders, access to support and insurance.”
Monzo is not alone in issuing one-off payments to staff. Lloyds Bank, Virgin Money and Taylor Wimpey are giving thousands of their staff an additional £1,000 in their pay packets, while employees at the Financial Times will receive £1,800.
Commenting on the trend, co-founder of HR consultancy 10Eighty, Liz Sebag-Montefiore, says that while cost-of-living bonuses can work at companies that can afford them, these businesses should try to ensure they are distributed fairly and benefit those who most need them.
She adds: “The thing about bonuses is you have to be fair – if you don’t give a set cost-of-living bonus across the board, how are you going to choose who gets it? If you base it on salary and only pay lower paid employees, it’s not necessarily fairer as you don’t know each individual’s exact financial circumstances. It may be better just to pay such bonuses, as you can afford, under your usual processes.”
Strategies to support employee financial health
There is a recognition that companies considering financial benefits for staff should prioritise assistance for the lowest-paid employees. A study from the ONS found that those with a gross personal income of less than £10,000 per year had the highest percentage of people reporting feeling very worried (31%) about the cost-of-living crisis. In contrast, only 12% of those with a gross personal income of £50,000 or more felt very worried about the current situation.
Money and Mental Health Policy Institute chief executive Helen Undy says there are many ways that businesses can support their employees’ financial and mental health – the most obvious of which is to ensure all staff are paid at least the living wage.
She also recognises, though, that supporting financial wellbeing goes beyond pay. “Businesses should routinely signpost helpful services like debt advice and mental health support, and ensure that managers have practical training in mental health to support staff who might be struggling.
”Employers should also be taking measures to support employees with existing mental health problems, such as proactively offering workplace adjustments like flexible hours, to help people stay and thrive in the workplace.”
Andrew Berrie, head of workplace wellbeing at Mind, advises employers to update and appropriately resource their financial wellbeing policies to help create an inclusive culture surrounding financial wellbeing.
“Existing benefits offered to staff — including hardship loans, pay advances, advice services or financial support such as travel loans or cycle-to-work schemes — should be well-promoted and easy to access,” he adds. “Having a sense of control over our personal finances is key to addressing financial anxiety, so educational programmes around budgeting, pensions and planning for retirement can be a great source of support.”
In addition, Sebag-Montefiore suggests companies should draw attention to their employee assistance programme, if they have one, and ensure workers know how to access counselling, as required. It is also important to provide a safe space where people feel comfortable discussing their financial or mental health problems.
Ultimately, the financial challenges the UK is facing will impact most people, whether due to rising mortgage repayments, soaring energy bills or food costs. Companies are well-positioned to give individuals peace of mind. And those that act early to support their staff’s financial troubles can avoid any potential negative impacts it may have on employee mental wellbeing.