Financial Inclusion: The Missing Piece in Your EDI Strategy
2020 was not only the beginning of the pandemic, but also the start of significant international societal unrest. The pandemic unveiled many racial, social, and economic disparities, and these inequalities remain glaringly evident today. I remember one surprising conversation with a client who had brought me in as a consultant to discuss overall employee wellbeing. While we discussed the importance of wellbeing, including financial wellbeing, the leader admitted it wasn't something they had considered. The leader confidently stated that financial wellbeing wasn't a concern for their employees because, fortunately, their company hadn't faced layoffs like so many others.
However, this perspective overlooked the reality that employees' financial situations can be complex. Just because the employees at a company aren't facing immediate layoffs doesn't mean they are without financial challenges. Behind the scenes, an employee's partner might have been laid off, or they could be dealing with other financial stressors unrelated to their employment status.
Socioeconomic status is a critical yet overlooked aspect of diversity. Just as we recognize the importance of ethnicity, gender and other identity markers, we must also pay attention to the diverse economic backgrounds of our employees. In today's volatile economic climate, where the cost of living continues to rise, companies and their leaders need to recognize that financial wellbeing is critical to overall employee wellbeing. This is where the concept of financial inclusion becomes pivotal.
Why Financial Inclusion Matters
Financial inclusion is just as important as all other branches of inclusion, including cultural and social. In the simplest of terms, it has very real consequences for people's quality of life. But more than that, financial inclusion matters in workplaces because it:
Symbolizes equity and fairness: All employees should have access to the same opportunities and resources regardless of their financial background. Economic inclusion ensures that financial barriers do not hinder an employee's ability to thrive within the workplace.
Directly impacts employee wellbeing: Financial stress can have a detrimental impact on both mental and physical health. When employees are financially secure, they are more likely to be productive, engaged, and committed to their work.
Plays a role in talent retention: Prioritizing financial inclusion signals to employees that their contributions are valued and supported. This can enhance employee loyalty and reduce turnover.
Is the social responsibility of companies/employers: Promoting financial inclusion aligns with broader corporate social responsibility goals, such as addressing social inequalities and supporting community wellbeing. Companies that focus on financial inclusion contribute to society's overall health and stability.
Challenges Faced by Low-Income Employees
Despite the importance of financial wellbeing, it's often overlooked, particularly by those in positions of privilege. This lack of awareness, especially by leaders, can result in decisions, policies, or practices that inadvertently exclude or disadvantage low-income employees.
One significant challenge faced by these employees is career instability. Constant financial strain can make it difficult for individuals to focus on career development and personal growth, ultimately limiting their potential. The lack of access to networks and mentorship is another challenge that low-income employees often face. Employees from lower socioeconomic backgrounds may not have the same opportunities to connect with mentors or professional networks as their more affluent counterparts, which can hinder their professional growth and limit their career progression.
Another major obstacle is limited access to education and training. Financial constraints may prevent employees from pursuing further education or professional development opportunities, hindering or disrupting career advancement.
Additionally, the struggle to maintain a healthy work-life balance is a common issue among low-income employees. A study published on Statista showed that over 1 million Canadians (nearly 5% of Canadians in the labour force) in 2022 held two or more jobs simultaneously. The need to work multiple jobs to make ends meet leaves little time for rest, family, or personal pursuits and can contribute to burnout.
Lastly, socioeconomic bias and discrimination can manifest in the workplace, with assumptions being made about an employee's capabilities or potential based solely on their economic background. This bias can further marginalize low-income employees and create additional barriers to success.
How Employers Can Foster Financial Inclusion
Many employers may believe that their financial responsibility starts and ends with employee payday—afterall, what more can organizations do other than pay their employees? Well, employers actually play a crucial role in shaping an inclusive workplace that fosters financial inclusion within their organizations. Here's how you can take action:
Conduct Needs Assessments: Regularly gather employees' input, feedback, and lived experiences to understand their financial challenges and needs.
Ensure Fair and Equitable Wages: Commit to paying employees a living wage that reflects the true cost of living in their area, and work to close wage gaps.
Offer Comprehensive Benefits: Provide employer-paid benefits such as healthcare and retirement savings or, at the very least, subsidize benefits to reduce out-of-pocket expenses for employees.
Support Education and Development: Offer tuition assistance, low-interest loans, or in-house skills development programs to support employee growth.
Implement Flexible Work Hours: Allow employees to adjust their work schedules to accommodate personal and financial needs.
Promote Wellbeing Programs: Introduce initiatives that support mental health, financial literacy, and overall employee wellbeing.
Ensure Equitable Career Advancement Opportunities: Ensure all employees can access internal promotions and performance recognition.
Leverage Employee Resource Groups (ERGs): Utilize ERG's to gain insights and shape policies that address the needs of diverse employees, including those from varied socioeconomic backgrounds.
Integrating Financial Inclusion into your EDI Strategy
Believing your employee's financial situation is stable simply because they receive a pay cheque is a dangerous mentality that can seriously hinder the wellbeing of your people. As we've discussed, financial wellbeing is not just about providing fair wages or benefits; it's about fostering a workplace culture of equity, diversity, and inclusion (EDI). An effective EDI strategy plays a crucial role in this by acknowledging and recognizing the diverse lived experiences of employees, implementing inclusive policies, and ensuring that every employee has the opportunity to thrive regardless of their financial background. By prioritizing financial inclusion, employers can create a more supportive, equitable, and resilient workplace that benefits employees and strengthens the organization.
