Employee Financial Wellness in the UAE – a sad affair

What is one of the biggest reasons for stress for your employees causing hindrance to an optimal employee financial wellness ecosystem? Based on a recent survey conducted by PwC, 58% of the employees currently working in the UAE are stressed about their financial well-being, compared to 16% who are not stressed. Out of the stressed employees, 50% admitted that they have been distracted at work due to financial reasons for a considerable amount of time. This hinders the productivity of your employees and doesn’t bode well for your company’s growth.

Employee Financial Wellness and dealing with emergencies

You are a responsible employer and you want to help your employees as much as possible. So, let’s try to identify what’s causing such financial stress. 38% of all the employees in the region have less than $1,000 to deal with any emergencies ($1,000 being the low-level benchmark that one should have saved for a rainy day). For Generation Z, this percentage goes up to 62% (Not particularly good news if your company has plenty of fresh graduates or young employees). For those who have some sort of retirement corpus built already, more than 50% believe they are very much likely to use the money saved for retirement purposes to spend on some sort of other cause.

Digging a bit deeper into problems with employee financial wellness

The problem is more deep-rooted than it seems! People working in this region anyway expect to continue working as long as they can (the concept of retiring at a certain age just doesn’t sound like a natural fit to them or probably they don’t think they can ever afford to live without working). The UAE Security and Savings survey 2020 echoes similar sentiment as it shows that 37% of the working professionals in the UAE expect to continue working beyond the retirement age. 45% on the other hand, expect to continue working as long as it is physically possible for them.

There is a serious lack of traditional pension or retirement plan (Unlike the ones like 401k as seen in western countries in the US), additionally, there is so much misconception around the gratuity money. A bunch of the respondents (43%) to the survey aforementioned stated that they believe their end of gratuity amount will be good enough for fulfilling their long-term needs. What they don’t understand is that after 25 years of service in the region, you will only accumulate 2 years’ worth salary with the current end of service gratuity system, whereas, any fund taking care of your long-term needs should be able to pay for at least 10 years of expenses.

What can you do as an employer to improve employee financial wellness?

As an employer, you can do a couple of things:

a) Create a workplace gratuity plan for your employees where you can contribute more than the stipulated monthly contribution from time to time to encourage your employees and ensure that that money is invested properly for the long-term growth of the retirement corpus (Icing on the cake can be providing your employees an option to contribute from their end as well)

b) You should work towards educating your employees about basics of financial planning and wellbeing as we can see the bunch of misconceptions that exist on today’s date in the UAE among working professionals.

With happy employees who are less stressed out about how to take care of their expenses during catastrophic times (Particularly more relevant in a post-COVID-19 world), your desired growth for the company will be easier to achieve. Remember that your company, almost always, is as good as your employees and if you keep them happy, they will almost certainly return the favor.

If you are wondering where to start with the aforementioned steps, FinFlx is here to help. Its state-of-the-art technology turns retirement contribution and management a seamless experience, plus, there are interactive resources for your employees to not only see their money grow in front of their eyes but learn the basics and more on how to be well-off financially. Just book a demo with us and see how it works yourself.

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