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How has Covid-19 hit our financial wellbeing

How has Covid-19 hit our financial wellbeing?

Between reduced demand and businesses closing their doors for months on end, the coronavirus pandemic has hit the UK and global economy in a way not seen since the 1930s.

Set to cost the UK almost £300bn just this financial year according to the Office for Budget Responsibility (OBR), GDP fell by 20.4% in April alone.

UK workers have felt the burden of a rapidly shrinking economy through the Job Retention Scheme, with almost one in five employees being furloughed (OECD).

Our Divided Together report asked 1500 people about the impact of lockdown on their financial, physical and mental wellbeing. Want all the facts at a glance? Take a look at our employee insight factsheets.

Divided about the economy

Despite over a quarter (26%) of respondents expecting the economy to improve and a similar percentage (23%) thinking it’ll stay the same, almost half of respondents (48%) believe it’s going to get worse.

Levels of optimism about the economy have been shaped by the way people have worked throughout the crisis. More than a third (34%) of those who’ve continued going to work say the economy will improve, whilst those who’ve been furloughed understandably lack the same confidence with 61% saying it’ll get worse.

Interestingly, almost two in five (37%) workers think the government could be doing more when it comes to job security and protecting jobs.

For employers, this level of economic uncertainty particularly amongst furloughed workers emphasises the importance of clear, transparent communication with their teams to minimise additional anxieties.

Personal finances

Those still going in to work are the most positive about their personal finances, with almost a third (30%) saying they’re expecting their situation to improve. Overall, just under a quarter (23%) of respondents are expecting an improvement.

A large percentage of people (44%), however, said they weren’t anticipating any changes to their personal financial situation, despite the significant economic decline.

Those who’ve already felt the effects of the shrinking economy through furlough were the most negative, with 41% expecting their finances to get worse, a view shared by 27% of respondents overall.

Returning to work

Overall, personal finance wasn’t a strong motivator for returning to work for the majority of people with only a third mentioning it as a plus point of getting back.

This could be because 58% of those who’ve been working from home say that saving money on their usual expenses is one of the main benefits of remote working ahead of more time with family and increased productivity.

The exception to this rule, however, was furloughed employees. For this group, 56% said that financial reasons were one of the main benefits of returning to work. This could be linked to the fact that less than one in five (18%) of furloughed employees are having their pay topped up by their employer.

Employer support

The challenging circumstances of lockdown have lead to more and more people turning to their employer for support.

Over a quarter (28%) are looking for more support with their general wellbeing, with 17% looking for financial management education or support.

Demand for education and support around personal finances was highest amongst parents (21%) and those who’ve continued to go into work throughout the pandemic (19%).

Giving employees the additional support they’re looking for during the transition period of returning to work will be important for minimising stress and getting back to productivity as quickly as possible.

Take a look at our articles on what issues HR teams should be focusing on and future workplace trends for more information and support.

For more insight about how wellbeing has been affected by lockdown, take a look at the Divided Together report or download our employee insight factsheets.

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