The Cost of Financial Stress in the Workplace

The connection between financial stress and mental health issues may seem obvious, but it’s often underestimated in the workplace. The mental health of Canadian workers has dropped to levels not seen since the start of the pandemic, with a sharp decline in financial wellness being a major contributing factor, according to a new report. In fact, nearly half of Canadians reported losing sleep due to financial worries last year and an increasing number of them say money is their leading source of stress.

With rising living costs, mounting debt and stagnant wages, financial worries are becoming a heavy burden that many employees carry into the workplace. As a result, productivity is slipping, morale is dipping and employees are dealing with a level of stress that has even the most resilient workers feeling burned out. Comprehensive and thoughtful employee benefits could serve as a much-needed lifeline for employees dealing with financial and mental health challenges.

Financial Anxiety and Mental Health

It’s easy to understand why financial anxiety has become such a significant issue for workers. Rising inflation, soaring housing costs and increasing interest rates have stretched household budgets to their limits. When employees are struggling to make ends meet, their bank accounts, along with their mental health, are impacted. Financial stress is closely linked to an increase in anxiety, depression and even physical health issues, all of which contribute to lower productivity and higher absenteeism.

In 2023, 29 per cent of Canadians aged 18 and older reported experiencing depression, anxiety or another mental health condition, which was up from 20 per cent in 2016. This is a vicious cycle: financial problems lead to mental health issues, which, in turn, affect job performance.

A quarter of employees say financial stress lowers their productivity at work, and they spend an average of 8.2 hours during work time stressing about finances, which could equate to a part-time job. Also, two-thirds of human resources professionals agree financially stressed employees perform worse at work. When workers are distracted by their financial burdens, they’re less focused, less engaged and ultimately less productive. They might even start looking for another job with higher pay or better benefits, a trend that can lead to high turnover rates, which can be a costly issue for any HR team.

Why This Matters to Employers

When an employee’s health or wellbeing is out of balance, it can also affect their employer. The toll on mental health can lead to burnout, absenteeism and even presenteeism, when employees show up to work but aren’t fully engaged. Research suggests that presenteeism costs Canadian employers significantly more than absenteeism, with the average cost of presenteeism in Canada estimated at over $26 thousand per employee.

For small and medium-sized enterprises (SMEs), this can be damaging. With fewer employees to begin with, the loss of even one team member’s productivity can have a disproportionate impact on operations.

The Role of Employee Benefits in Easing the Strain

Offering a comprehensive benefits package is one of the best ways for employers to show employees they understand the challenges they face and that they’re willing to help.

Here are a few ways employee benefits can make a difference:

• Financial wellness programs are a good way to help employees manage their financial stress. These programs can include budgeting tools, debt management counselling, retirement planning resources and even access to financial advisors. Offering employees the tools and knowledge to improve their financial situation gives them an opportunity to take more control of their finances and, by extension, their mental health.

• Mental health services are more important than ever. If your benefits package doesn’t already include access to mental health professionals, whether through counselling or digital mental health apps or platforms, you may want to consider adding these services. Providing employees with a safe, confidential space to talk about their issues can help mitigate the mental toll of financial stress and reduce anxiety.

• Employee Assistance Programs (EAPs) are another excellent tool for supporting employees through difficult times. These programs typically offer confidential counselling and support services for issues ranging from financial struggles to family problems and mental health challenges. The convenience and accessibility of EAPs ensure employees get the help they need before their issues escalate into more serious health problems or workplace performance issues.

• Implement an Employer Sponsored Savings Plan. A matching Group RRSP or Pension Plan will help employees to know that they’re saving money while managing other day-to-day expenses. Knowing they’re saving money for their future will help ease some of their financial anxiety.

Taking Action

The cost of doing nothing when it comes to employee mental health is steep, both in terms of productivity and employee retention. Employers can do the right thing for their employees, and their businesses, by investing in a comprehensive employee benefits package that includes financial wellness and mental health resources.

Contact us today so we can help you build a benefits plan that fits your business and meets the needs of your team.

Suggested Reading

Benefits to Ease Employee Financial Stress in the Face of Inflation

How EAPs are Expanding to Meet the Needs of Today’s Workforce

How to Improve Mental Health Support at Work

Additional Resources

FP Canada 2024 Financial Stress Index

The state of employee financial stress and its impact on performance