Financial health plummets following Covid-19, with two-thirds of Brits feeling unconfident about the health of their finances

• The UK workforce’s confidence in their financial health has plummeted in light of Covid-19, with 59% of Britons feeling confident before the pandemic to just over a third (35%) now
• Workers who have been furloughed have seen the most significant drop in confidence, falling from three fifths (60%) to under a quarter (24%)
• Yet big firms are failing to adequately communicate with their employees on financial health, with four in ten employees (42%) getting radio silence from their employer
• Less than half (46%) of the UK workforce say that they are satisfied with the communication they’ve had from their employer during the Covid-19 pandemic

UK employees have experienced a sharp drop in confidence in their financial health in light of the Covid-19 pandemic, according to new research from professional services consultancy Barnett Waddingham. Comparing how they felt before and after the pandemic, three fifths (59%) of employees were confident in their finances then, but now that figure has dropped to just over a third (35%).

Furloughed workers have been hit the hardest by the pandemic. They have experienced the greatest drop in their financial confidence, from three fifths (60%) to under a quarter (24%). The Government’s job retention scheme has enabled employees to retain their jobs, but with many living on 80% of their normal salary and with increased anxiety about their job insecurity, it has impacted their sense of financial health. Moreover, a fifth (18%) of employees currently on furlough ultimately expect to be made redundant.

Over 65s report the biggest drop in financial confidence. Before the pandemic, seven tenths (69%) of over 65s felt confident, but this figure has fallen 33% to just 37% of employees. Younger workers, aged 18-24, are the most insecure about their finances, with just under a third (32%) now reporting financial confidence, compared to half (52%) before Covid-19. Men feel more confident than women in their financial health both before and after the pandemic. Men’s financial confidence has dropped from 60% to 36%, versus women’s from 58% to a third (33%) now.

Communication from employers is key to maintaining confidence and wellbeing, and this is a critical time to be engaging with employees to help reduce their worries about their financial and mental health. Yet a third (34%) of employees say they have received no communication, and a quarter (27%) only a little communication from their employer about financial health. For furloughed workers, who are more likely to be struggling at this time, almost a third (31%) have heard nothing from their employer to support their financial health, 28% have had a little communication, and almost half (46%) have had no communication regarding their mental health.

The biggest firms are falling furthest behind when it comes to communicating with their employees about financial health. Two fifths (42%) of employees at firms with over 5,000 staff say that they have received no communication from their employer. This compares to just over a quarter (27%) of employees at mid-sized firms with 50-200 staff, and the group who are also most likely to receive ‘too much’ communication.

But effective and engaging communication is about the balance between quality and quantity, and there is a very strong correlation in these results between the two. Less than half (46%) of the UK workforce say that they are satisfied with the communication they’ve had from their employer to support both their mental and financial health during the Covid-19 pandemic, with furloughed employees being significantly less satisfied at 42% for communications about financial health and just 35% for mental health. Younger employees are the most satisfied with financial health communications but the least satisfied with mental health communications. It is the larger companies that have delivered more effective mental health communications, but the trend is the opposite for financial health communications.

Peter Meyler, Associate and Head of Workplace Consultancy at Barnett Waddingham, said: "The UK workforce has been swept up in the tidal wave of Covid-19, and it’s having a notable and obvious impact on their financial confidence and anxiety about their futures. However, in order to reverse the sharp drop in employees’ financial health, the need for proactive, honest, clear and consistent communication and engagement is paramount – more now than ever.

"Our research reveals a concerning lack of satisfaction with communication by employers that needs to be addressed to stop the creation of a divide between employers and employees. Even as employers face the significant challenge on business operating models, radio silence is not ok. UK employees are obviously worried about the future and how they are going to financially survive this crisis. It is essential for them to feel like their current situation is understood and what is being communicated needs to be a reflection of what they are experiencing with undeniable quality.

"Throughout these months of uncertainty, it’s crucial that employers do a better job with supporting their employees, regardless of working status. The financial, mental and physical health of employees should remain a priority, now and beyond the impact of Covid-19. Quality engagement is not just a nicety, it is crucial."