The war between Russia and Ukraine has employees worried about the future. The rapid escalation and stubbornness of Russian President Vladimir Putin has many wondering when and how this conflict will end. Simply put, this is poised to be the largest war Europe has seen in decades. As a result, employees are going to need help navigating the emotional and financial complexities of this rapidly changing situation.
To begin, the war will have an impact on our mental health. Many employees have friends and family in either Russia, Ukraine, or surrounding countries and are concerned about their safety. Furthermore, the looming threat of global conflict will increase anxiety in general. If you or any of your employees are feeling mental distress, we strongly encourage you to call out to one of these hotlines or utilize these resources.
We have also received a number of questions from our clients about specific ways the war may affect them and their employees. In the following section we will answer four of the most common questions: the expected impact on inflation, what to do about the financial markets, whether the war impacts benefits premiums, and how you can help support Ukrainian people.
Should I expect greater inflation?
World governments quickly imposed heavy sanctions on Russia after their aggression towards Ukraine. The immediate effect has been a sharp increase in oil and natural gas prices around the world, which US President Joe Biden described as the cost of defending freedom.
Costs are going to go up, at least in the short term. Russia is a major global exporter of natural gas, crude oil, fertilizers, wheat, and metals. Cutting them off from the global market is going to hurt industries that are heavily reliant on their resources. For example, they are the second latest producer of platinum, a material used in catalytic converters in vehicles. Without their steady supply of the metal, the car industry will struggle to meet production targets, which will lower the (already small) supply of available vehicles for sale and cause prices to rise.
What will happen to the financial markets?
Whenever a global crisis arises, people wonder what to do with their stock portfolios. It’s a natural instinct to want to protect our investments and ensure we don’t suffer unnecessary or avoidable losses. Though invasion of Ukraine had been anticipated for some time, its rapid escalation and size caught some investors off-guard and triggered them to move to safer assets such as gold and bonds, causing a sharp drop in the markets.
Expect short-term volatility. Sanctions have historically severely impacted the markets and this trend is likely to continue. We will continue to see sharp rises and falls. The good news is that markets do recover and return to normal eventually. This chart by iA Connected shows the long-term resiliency of markets after a global conflict.
What does that mean for your employee’s investment strategy? Nothing. Time in the markets is more important than timing the market. Selling your investments now is unwise as it means you’d have to get out and back in at exactly the right time to avoid suffering losses. Employees should stick to their regular monthly contributions.
Will the war affect my benefits premiums?
The short answer is no.
The slightly longer answer is that benefits premiums are calculated once per year based principally on plan usage and trends in health care, not consumer inflation. The current volatility of the market and high inflation rates will have no short-term impact on premiums.
How can I help?
Many employees, and people around the world, want to know how they can contribute to helping Ukrainian people. The Kyiv Independent published a list of ways to specifically help the Ukrainian military and below is a list of charitable organizations providing care and services to Ukraine.
- Doctors without Borders is setting up emergency response activities in Ukraine and neighboring countries such as Poland, Moldova, Hungary, Romania, and Slovakia.
- Nova Ukraine’s Heart2Heart initiative assembles care packages for people in Ukraine.
- The International Committee of the Red Cross provides humanitarian relief to Ukrainians affected by the conflict.
- CARE’s Ukraine Crisis Fund provides food, water, hygiene kits, and more to Ukrainians, especially women and girls.
- GlobalGiving’s Ukraine Crisis Relief Fund funnels funds to humanitarian support in Ukraine, including shelter, food, and clean water for refugees.
