Report shows employee stress costs employers thousands in losses
A snapshot of how Canadian employees with employer-sponsored retirement plans feel about their general financial security, retirement readiness, and stress levels was released today by Manulife as part of its third annual Manulife Retirement survey: Stress, money, and well-being. It highlights the effects of the unstable economy on Canadians and possible solutions that companies and employees should think about in reaction to the macroeconomic situation.
"Just when the pandemic was finally giving way, Canadians were faced with a barrage of challenging economic concerns,” said Aimee DeCamillo, head of Global Retirement, Manulife Investment Management. “Our survey shows not only how it negatively impacted their personal finances and mental health but also offered evidence of what might be done to counteract the uncertainty.”
Seventy percent (70%) of those polled said they were concerned about the economy due to the Bank of Canada hiking interest rates seven times in 2022, inflation averaging 6.8% in that year, and the possibility of a recession.
The most commonly mentioned difficulties were the effect of inflation on cost of living (61%), increasing interest rates (46%), and overall economic circumstances (42%). Almost all respondents stated that their expenditure has increased on food (98%), household necessities (89%), gas (86%), and regular bill payments (79%).
In order to handle rising costs, 77% of Canadians are altering their purchasing plans and shopping routines. Two out of three people are comparing prices, and over half are delaying major purchases. Over a quarter are limiting their purchases to only the necessities.
More than half of respondents (53%) express concern about one or more areas of their own financial situation, including credit card debt (40%), a lack of emergency funds (30%), and a lack of retirement savings (29%). The poll also revealed that employees are now almost twice as likely to rate their personal finances as fair or poor (40%) than very good or exceptional (21%).
According to this year's study, there were 10% more people who thought their financial condition was fair or poor and 11% fewer people who said it was great or very good.
With 71% of workers indicating that their mental health has interfered with their capacity to work during the previous year, mental health problems among employees are becoming more prevalent. Four out of five respondents worry about their finances when they are at work, and roughly one third say they worry frequently.
Financial strain can cost businesses close to $2,000 per employee in lost output and absenteeism, amounting to $178,600 for small businesses with 10 to 100 employees, $891,214 for medium-sized businesses with 101 to 499 employees, and more than $893,000 for large employers with 500 or more.
One-on-one financial advisor help increases the likelihood that employees will report having a very good or exceptional financial status. In addition, individuals who have an advisor say they save money more easily (36% vs. 28% without an advisor), are more likely to be on pace to retire (47% vs. 34% without an advisor) and feel better about their mental health (54% vs. 42% without an advisor).
These results imply that financial wellness initiatives can lower financial stress, increase employee retention (75%), encourage people to consider applying for a job at the firm (73%), and increase productivity (66%).
"While our findings show Canadian workers' financial and mental health is low, the good news is that we can see what helps," said Brett Marchand, head of group retirement, Canada, Manulife.
"Greater engagement—through financial wellness programs and professional financial advice—can help employees manage financial stress and improve mental health, while helping their employers with talent acquisition and retention, productivity, and the bottom line."
