Financial worries are now the leading cause of workplace stress, a situation set to get worse as the cost of living crisis continues its stranglehold on UK employees. The crisis is affecting us all, but it’s not affecting us equally. The United Kingdom has some of the highest levels of inequality in Europe, according to the GINI coefficient, an index that measures income inequality within countries. A host of current research shows that employee groups who would normally be the focus on D&I initiative — female, ethnic minority, neurodiverse and disabled employees —are also disproportionately feeling the cost of living pinch.
The gender wealth gap
Research by the Living Wage Foundation showed that, overall, a fifth of women in work (20.4% or approximately 2.9m people) are paid below the real Living Wage, compared to 14% of men (1.9m). As a result, jobs held by women account for almost 60% of all jobs paid below the Living Wage. Analysis of the ONS’ Annual Survey of Hours and Earnings has found that in a range of sectors including care work, the arts, entertainment, accommodation and food services, low paid roles are predominantly done by women. This puts women at a financial disadvantage from the offset. And, the research also demonstrates that women have been hit hardest by the recent sharp rise in inflation.
Looking longer term, the average pensions income gap between women and men is 38%, and new TUC analysis reveals that, in many industries (like manufacturing and retail), women have workplace pensions worth less than a fifth of male colleagues. Having a solid retirement income is crucial for a stable and comfortable future, and without this, older women could be left in a precarious position. For female colleagues approaching retirement, this can be a significant source of stress.
Inequality and ethnicity
Gender isn’t the only front on which the cost of living crisis disproportionately affects financial wellbeing. More than a third of workers from ethnic minority (or global majority) backgrounds are unable to cover their essential costs each month, research by People Like Us has shown. Redundancy worries are also worse for workers from Black, Asian, mixed-race and minority ethnic backgrounds, with 41% worried that they will lose their job due to rising costs, compared with 27% of those from a white British background. In a time of economic turmoil, this can leave people feeling ever more anxious, which can have a huge impact on workplace performance.
Meanwhile, according to The People’s Pension, the average pensioner from an ethnic minority is £3,350 a year worse off than other pensioners, representing a 24.4% gap in retirement income. Again, if we approach financial wellbeing from the perspective of diversity and inclusion, it’s clear that particular groups are being left in the cold.
Considering neurodiversity
Neurodiversity is increasingly recognised as another important facet of inclusion and it should also be factored into financial wellbeing strategies. Research from WTW’s Global Benefits Attitudes survey showed that neurodiverse employees report lower physical, emotional and financial wellbeing compared to neurotypical employees, with 70% suffering mental health issues. The data also showed that neurodivergent employees would prefer more support around day-to-day finances, as 57% of colleagues are living payday-to-payday, versus only 34% of neurotypical employees. There is a clear remit to consider neurodivergent colleagues when building an inclusive financial wellbeing strategy.
Disability and financial wellbeing
Finally, the latest TUC statistics put the disability pay gap at a shocking 17.2%. Over a quarter (29%) of disabled households are in ‘serious financial difficulty’, compared with 13% of non-disabled households They were more likely to report being anxious when thinking about their financial situation (69% vs 54%), have low levels of financial confidence (47% vs 28%), have no savings (38% vs 22%), and find it a constant struggle to pay bills (30% vs 13%), 74% said they’ll be unable to cope if prices continue to rise and 68% said the pressure is affecting their mental health.
Why financial wellbeing should be part of the D&I conversation
Although there are a lot of important threads to the workplace D&I conversation, financial wellbeing is the one element that often gets left out. That’s a critical oversight given the obvious wealth gaps in the UK, and the impact that poor financial wellbeing can have on performance at work. If certain colleagues are left to struggle without support, a workplace diversity and inclusion policy is unlikely to succeed.
What’s more, most D&I efforts focus on representation and removing workplace bias, which are important, but not sufficient to solve the larger issue of financial inequality. Creating lasting wealth for underrepresented communities, however, can lead to widespread social change by fueling generational advances.
That’s where financial wellbeing can be invaluable. Even something as simple as increasing financial literacy through targeted education can be a powerful step forward. But education alone isn’t enough: a successful financial wellbeing program should make it easy for employees to take action across their entire financial life. That means providing a complete view of all their personal finances in context of life goals, delivering clear recommendations, providing the tools to take action and making it easy to monitor progress.
Maji is committed to support diversity and inclusion in the workplace, and we’re making it part of our mission to get financial wellbeing to become a key part of the conversation. If you’re a D&I professional looking to make a real difference where it’s most needed, reach out to us today: mat@maji.io
Photo by Amy Elting on Unsplash
