The impacts of the cost of living crisis on employee mental health

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Tuesday, July 12, 2022

Everywhere you turn, it feels like there are signs of the cost of living crisis. In May, UK consumer price inflation soared to 9.1%, the highest it has been in Britain in three decades. Therefore it’s no surprise that the Money and Mental Health Policy Institute has reported an increase in people suffering anxiety due to money concerns and employee mental health taking suffering. Naturally, many employees are finding their stress impacting their work, and employers are searching for ways they can help their workers.

Employee mental health can affect productivity

Steve Watson argues that the cost of living crisis will result in a “double whammy” hit to company productivity. Understandably, financial worries affect an employees ability to do their job. It can also cause mental health problems, which may cause issues that affect long term productivity. According to the UK Health and Safety Executive, workers who suffered from stress, anxiety and depression took an average of 21.6 days off sick in financial years 2019-2020.

With many on lower incomes having to choose between heating their homes and eating, the problem may be more prevalent than employers realise. More than 50% of UK adults have reported feeling worried about rising prices, with one in five saying they feel unable to cope. Money concerns can also exacerbate existing health problems, potentially resulting in more days lost to sickness.

How can employers help their workers

Sometimes, employers can be reluctant to discuss money stresses with employees, because they fear they will be faced with demands for higher wages. RAND Europe have studied the impact of financial interventions, such as money management lessons and pay advancements. Data analysed from two major workplace surveys showed that despite there being low participation rates in financial wellbeing initiatives, the mental health of those who did take part improved. This was clear especially in the cases of younger people, those on lower incomes and those with ethnic minority backgrounds.

Other studies have shown that other initiatives such as financial counselling and coaching can lower stress, improve employee mental health and reduce workplace loan requests. However, Christian van Stolk, executive vice president at RAND Europe, says that providing helpful money managing resources, are not a substitute for poor pay. “You cant just say our workers need to be more financially literate if they are on very low incomes, supplemented perhaps by benefits,” he argues.

If you are interested how the salaries of your employees compares to the average in your county, download our Salary Guide. If you are struggling to recruit to your team, we can help. Contact us on 01295 262266 or use our Vacancy Form.