The COVID-19 crisis has forced many employers to rethink their employee health and wellbeing strategies but a key factor, which is still being largely overlooked, is financial wellbeing.
Our last Global Benefits Attitudes Survey reported that money worries are becoming an increasing cause of anxiety among workers, with more than two in five employees in the UAE living from one pay cheque to the next 2019/2020 Global Benefits Attitudes Survey Report.
In this article I’ve set out the steps that companies across the region should be considering in order to build financial resilience among their employees.
First let’s define the what we mean by financial wellbeing. Simply put, it’s having an understanding, and being in control of, one’s finances in order to build a resilient financial position.
When workers lack confidence in their financial situation both they and their employer can suffer. Money worries are, as a minimum, an unwanted distraction for employees, but it may also lead to further problems, such as sickness, stress and other mental health issues. This can have a detrimental effect on productivity, engagement and motivation at work.
Given how competitive the labour market is right now, companies that don’t address this issue as a matter of urgency will not get optimal outputs from their employees, and may struggle to attract and retain the best talent as other organizations take actions to address the issue.
So it’s in every employer’s interests to take active measures to support their employees’ financial wellbeing, as part of a holistic wellbeing plan, make their company a more attractive place to work and to fulfil their duty of care.
Whilst this issue is not new, the pandemic has exacerbated underlying causes of anxiety amongst employees, and laid bare a growing financial gap for retirement planning, childcare and education funding, and other savings needs, which can be closed by putting in place an effective financial wellbeing programme.
Despite workers in the UAE enjoying tax-free salaries, many struggle to make adequate provisions for both short-term savings and longer-term financial planning, For example, with the workforce generally being of a young age, but generally no access to a pension, retirement planning is often overlooked. ,. Many look to their employer to provide support and guidance.
But we have seen a disconnect between employers’ and employees’ perception of the problems. Our survey found that only 32% of employers view employee retirement savings as a big challenge, whereas 80% of employees say it’s important for their organisation to provide greater assistance in that area.
The good news is, however, that firms are starting to take notice and do something about it. Nearly four in five employers that we surveyed in the GCC say they are planning to develop financial wellbeing strategies over the next two years, to help bridge the retirement savings shortfall.
But it is critical that employers listen to employees to understand what they really need if they are to provide the right solution.
So what is needed to provide a quality financial wellbeing programme? It can be broken down into six key components: insights, strategy, design, delivery, engagement and measurement
01
Organisations plan to enhance their financial wellbeing strategy as they believe that will enhance it’s value proposition to employees.
02
Organisations are expected to move quickly to develop their financial wellbeing strategy over the next two years, specially to address the challenge of retirement savings.
03
In future, support for employees will be a broad mix of technology solutions via apps and human interaction via seminars, access to financial advisor. At-retirement support an emerging priority.
04
Organisations are willing to increase funding for financial wellbeing programmes. Also, allowing employees voluntary and flexible benefits is of interest. Reallocation from core benefits to other programmes also pertinent.
05
Gaining employee insights and measuring the success of programmes is a focus for employers. Direct feedback, data analytics are emerging methods.
At Willis Towers Watson, we define our approach to this as building financial resilience.
First, you need to understand an employee’s needs and assess the current state of the programme. Ask them for feedback. Use data analytics, employee surveys and virtual focus groups, benchmarking against the wider market, and compile an inventory of the programmes currently available.
Then you need to articulate your reasons for promoting and providing financial wellbeing programmes to your workers. That means setting and communicating corporate objectives in line with the programme, identifying a vision for outcomes and establishing the wider context of the overall wellbeing strategy.
Thirdly, you must modernise the reward and benefits available to reflect the organisational and external changes to the work environment over the recent past; for example, the emergence of remote and hybrid working. This means redesigning and introducing new benefit options, including supplemental pension or workplace savings schemes, and enabling greater flexibility.
Next, you need to ensure that the employee experience matches the programme’s core values and delivers the expected outcomes. This comes down to selecting the right provider, plan designs and features, delivery processes etc, including relevant technology platforms and in-person approaches.
Putting a well designed programme in place is one challenge; you also need to make it straight forward for employees to make the most of the benefits on offer. You can achieve this by improving internal communications and providing interactive online and mobile apps to help employees with budgeting and spending.
You can also provide self-assessment tools, as well as guidance, advice and support via seminars, workshops, coaching and access to financial advisers.
Digital technology and data analytics will play an increasingly important role in ensuring the best outcomes here. However, it’s important to bear in mind that the technology approach is not for everyone – some segments of the workforce will be more comfortable with in-person support and there’s a fair degree of scepticism about using on;ine tools, for example among low-income earners. More than half say they wouldn’t trust them.
Finally, you must keep track of the programme using relevant performance measurement and reporting standards. Establish appropriate measures of return on investment, actively manage seek feedback to identify what is and isn’t working well within the programme in order toimprove outcomes.
Longer term planning for retirement is a specific area of financial resilience that was highlighted as a concern and priority amongst employers we surveyed in the region. Companies and governments are already making big strides in recognizing and making plans for bridging the retirement savings gap. The Dubai International Finance Centre was the first body in the UAE to overhaul the gratuity system – a defined end-of-service benefit that all foreign employees are entitled to after completing at least one year of service – by introducing the DIFC Employee Workplace Savings (Dews) plan in February 2020.
Under the plan, employers in the free zone are required to contribute between 5.83% and 8.33% of an employee’s wage, depending on their length of service, every month to a fund administered by the trust. Employees can also make additional voluntary contributions.
The Dubai Government recently announced that a similar plan would be rolled out to allow non-Emirati employees working in Dubai’s government and public sector to join a new workplace savings / pension plan in addition to the existing gratuity scheme.
In the private sector, our research indicates that one quarter of companies are looking at improving their end-of-service benefit beyond the local regulatory requirements, while one fifth are focused on enhancing general savings or investment accounts. The same proportion are also considering supplemental healthcare or critical illness insurance.
Retirement savings is however not the only concern. There’s also a big push to help employees to meet the ever-rising cost of living. For example, two-thirds of GCC employers acknowledge it’s important to provide greater assistance in the area of childcare and education.
But it’s not a one-size-fits-all approach that’s needed. Every employee’s circumstances are different, so the programme should be tailored according to their needs. Generally a focus on best in class providers rather than a one-stop shop for all benefits is more effective.
Of course employers budgets are also under pressure. So whilst some are saying they would consider additional funding for new financial wellbeing benefits if needed, many will need to consider how best to utilize existing budgets byproviding employee choices and voluntary benefits.
Employees are saying that they want more support in the area of financial wellbeing, and they trust their employer to provide that support. Employers need to act now to listen to these concerns so that they can redesign and modernise their employee support programmes to meet the emerging challenge of financial wellbeing.
| Title | File Type | File Size |
|---|---|---|
| Financial wellbeing survey - GCC | 1.4 MB |
