REBA’s inside track: the “economic emergency” and the impact on employee mental health
It will come as no surprise that the economy is set to contract by 11.3% in 2020, the largest fall for more than 300 years, and economic output is not expected to return to pre-crisis levels until the fourth quarter of 2022. The consequences of Covid-19 mean that by 2025, the economy will be around 3% smaller than was expected in this year’s March Budget forecast.
What does this mean for employment and pay?
Once the furlough scheme ends in March 2021, unemployment is expected to reach 7.5% next spring, with 2.6 million people out of work. And pay packets will also be affected. The Chancellor announced that an estimated 1.3 million public sector workers will see their pay frozen in 2021-2. Private sector workers will also feel the impact, with analysis by the Resolution Foundation suggesting that the Covid crisis is on track to reduce average pay packets by £1,200 a year by 2025 compared to pre-pandemic forecasts.
But it wasn’t all doom and gloom. The lowest paid will be supported with an increase in the National Living Wage of 2.2% to £8.91 an hour from April 2021, and the age for qualifying for the National Living Wage has also been lowered so that 23 and 24-year-olds will receive the higher wage. Low earning public sector workers – those who earn below the median wage of £24,000 – will also be guaranteed a pay rise of at least £250, benefiting around 2.1 million public sector workers.
Those who are left out of work due to the pandemic may also receive support through the government’s new £4.6bn package of back to work initiatives. These include a £2.6bn Restart scheme to help those out of work for 12 months, and a £1.6bn Kickstart scheme to subsidise jobs for young people.
Health and wellbeing
The Chancellor also revealed significant support for the NHS to help it cope with the pressures of dealing with Covid-19. He announced that a total of £18bn will be spent on Covid testing, PPE and vaccines next year, while there was also additional money allocated to help the NHS tackle treatment backlogs and to enable delayed operations to go ahead.
Yet, despite this huge budget, just £500m was allocated to mental health services in England. Although the government has published a policy paper Staying mentally well this winter which provides guidance for individuals and employers, compared to the spend on physical health, NHS mental health services are unlikely to be able to meet demand.
Vicki Nash, head of policy and campaigns at the mental health charity Mind, commented: “While there is no doubt that the additional funding for NHS mental health services set out in the Spending Review is essential, and very much welcomed, we do note that this is some way short of estimates that due to increased demand mental health services will require more than £1bn a year for the next three years, to deal with the long term fall out of the pandemic.”
As we’ve seen from other articles published by REBA this week, “there is no vaccine for the mental health consequences of Covid-19”. And so, it is fair to say, that we can expect a deluge of mental health-related issues to surface in the workplace.
As the Chancellor has warned, there are tough times ahead. Many families will experience a squeeze on their finances, while the ongoing mental health impact of the coronavirus restrictions mean that many people are struggling to cope with daily life.
Employers will undoubtedly be one of the first lines of defence when it comes to supporting employees’ mental wellbeing. And so ensuring that wellbeing – and in particular mental wellbeing – policies are visible and well communicated will be essential. The need for human, compassionate workplaces will continue, and will perhaps become even more important as we navigate the recovery from Covid-19.
The author is Dawn Lewis, content editor at REBA.
