The current pandemic and ongoing lockdown has not only put financial stress on several businesses and organizations, but it has also put stress on millions of Indian employees as well. As per a survey conducted by The7thFold, 36% of Indian employees have reported issues regarding mental health during the pandemic. It found that employees below the salary of Rs 5 lakhs per annum were more vulnerable and 55% reported personal finance issues. While the lockdown restrictions are relaxed and business will slowly start thriving, it is important for organizations to take into consideration the financial stress that their employees would be going through currently.
Another survey found out that 46% of Indians (House Credit India Finance) had borrowed or taken loans to run their households and make ends meet during the pandemic. Due to uncertainty about their future, 27% borrowed to pay their monthly instalments while 14% borrowed as they had lost their jobs. Even a survey conducted by KPMG India found out that 62% of Indian CEOs took salary cuts during the pandemic. As businesses continue to have lower activity and market demands, it will have a direct impact on employees in the lower-middle class income group. It is this group that often runs out of money in between paychecks. With salary cuts and loss of job, this stress has been further amplified due to the pandemic. While this group would borrow money from their employer, friend or loved ones in case of emergencies, in the current scenario, this access would also have been denied to them for varied reasons.
Addressing the issue
In 2019, a study conducted by Willis Towers Watson, 63% of Indian organizations have or are already developing a strategy to improve the financial well-being of their employees. Moreover, 13% were considering that in three years at the time when the survey was conducted. The current situation has definitely amplified the need and demand for implementing solutions that can help reduce financial distress among employees. While 87% of organizations plan to hike salaries of their employees in 2021, as per an Aon Hewitt India survey, more needs to be done.
With work from home becoming the norm and several employees preferring to continue doing so even after the pandemic, organizations need to reform their allowance policies. This includes relooking at allowance provided for transport and expanding benefits for connectivity, electricity and any medical expenses that are incurred.
Companies should also adopt advanced salary solutions with the help of digitisation in order to ease the claim process. Such solutions can also be personalized as per the employee’s needs with the help of AI and IoT that will give a better insight upon the claim trend.
As per a Koppr report, 51% of Indian employees said that they don’t have enough money with unexpected expenses. The survey highlighted that nearly half of Indian employees said that the financial wellness program in their organization didn’t help them at all. It pointed out that 38% would prefer benefits in investment/ retirement while 20% would prefer unbiased financial counselling to help reduce financial stress. It is thereby important for organizations to enhance their wellness programs to guide employees in understanding and managing their finances. This will also help in creating a stronger bond between the employer and employee as well.
Companies like Myntra and Mercer India have rolled out financial wellness programs that tailor to an individual employee’s financial needs and demands. Such tailored programs also help in motivating employees rather than having a one program fits all approach. These programs need to take into consideration the generational gap, gender issues as well as debts that employees would have incurred in the past. Organizations need to tailor and integrate their physical, mental and financial programs together in order to provide a holistic solution to employee issues. This will help in not only preparing employees to manage their finances and create savings for their retirement but also help in preparing them for any future financial crisis or emergencies as well.
As the old saying goes ‘Every cloud has a silver lining’ and this saying is still relevant in our current reality. While financial wellness programs were being planned by India Inc., the current pandemic definitely presents the best opportunity to adopt them.