Employees Spend an Average of 13 Hours a Month Worrying About Money

6/26/2024

Dace Tauriņa, Figure Baltic Advisory senior consultant

Financial well-being is closely linked to the living wage. While it may not be the most critical component, if a person does not earn enough, the financial aspect becomes dominant, occupying the mind with questions about having enough money. International data shows that people worry about money matters for approximately 13 hours a month. Considering that well-being comprises multiple components, it raises the question: can an employer help with all of them?

In the Latvian labour market, there are many people whose earnings are below the living wage – the minimum income level needed by an individual or family to cover basic needs and maintain a decent standard of living in a specific geographic area. Although each person's requirements and, thus, their living wage vary, employers can use statistically calculated averages to establish a foundation for their pay systems. According to "Figure Baltic Advisory" data, considering a certain range of services and products, last year the living wage in Riga was €1501 (gross), while in the regions it was €1397 (gross). For some, this might seem low; for others, high. Therefore, every employee should have an approximate idea of their living wage so they can seek suitable job opportunities and acquire the necessary skills. Only then can they consider additional benefits that are important to receive from their employer. Being confident about financial security allows us to dedicate time and other resources to other dimensions of well-being.

The Increasing Importance of Fair Compensation

However, employees worry not only about financial security but also about being paid fairly. People think about money in comparative terms: Am I paid as much as my colleague in the same position? Am I paid less than others, especially if they work worse than me? Is more paid elsewhere for the same job? Therefore, a crucial aspect of financial well-being is fair compensation. It is the employer's responsibility to create a pay system with clearly defined transparent principles that can be simply and understandably explained to the employee, clarifying pay differences and opportunities to earn more.

If employees are not informed about their pay and its formation principles, they might wrongly conclude that they are not paid fairly. In a study by the company "PayScale," involving 71,000 employees with above-market average pay (in the same positions), 35% wrongly believed they earned less than the market average, 45% thought they earned the market average, and only 21% knew they were paid more. If employees feel stressed about their pay, it affects not only their performance but also their health, making regular and open conversations about pay very important.

Financial well-being is not only about the amount of pay – it can also include financial aspects provided by the employer, such as health insurance, additional vacation days, and paid study leave. When discussing additional benefits, it is important to distinguish between basic bonuses, which have become standard in the labour market, and special extras offered by very few companies. Modern atypical benefits include various tools to promote employee well-being, such as psychotherapy sessions, resources and tools for improving financial literacy, a four-day workweek, paid holiday trips, and mental health strengthening opportunities.

What Benefits Do Employees Expect and What Do Employers Offer?

Although more and more employers carefully analyse what benefits to offer employees, considering gender, age, and other differences to tailor benefit packages, a gap still exists between what employers offer and what employees expect. The international "Mercer" study, analysing reasons why employees choose to work at a particular company, found that one of the determining criteria for women is flexible working hours. Equally important are health benefits and meaningful work, while for men – competitive pay, professional growth, and meaningful work.

Employee Well-being Is Not Just the Employer's Responsibility

It is important to understand that employee well-being is not just the employer's responsibility. Of course, the organization can provide significant support through various activities and a well-thought-out internal culture and pay system. However, each person has their own preconditions to ensure they feel good at work. It is also our responsibility to remember and care for the things that make up our well-being and allow us to feel confident about ourselves.