'Financial storm' facing Canadian workers is an 'emergency,' as more face financial stress: survey
Published Tuesday, October 3, 2023 11:04AM EDT
Last Updated Tuesday, October 3, 2023 11:04AM EDT
There has been a significant spike in the number of Canadian workers who are financially stressed, according to a new survey by the National Payroll Institute, which described its findings as a serious “financial storm” that is “far more intense than predicted.”
The 15th Annual National Payroll Institute's Survey of Working Canadians, which was conducted by the Financial Wellness Lab on behalf of the institute, found that the number of workers classified as being financially stressed jumped by 20 per cent over the past year, hitting 37 per cent overall.
According to the online poll, which surveyed 1,500 working Canadians between July 21 and Aug. 1, 63 per cent of the respondents who reported being financially stressed said they are spending all of their net pay each pay period just to stay afloat, while 30 per cent said they are taking on debt or dipping into existing savings as their net pay is insufficient to cover their costs.
For those in the financially stressed group, saving money now is more difficult than it has been at any point in the past decade, the institute said.
"The frightening reality of this storm is that the contributing factors to financial stress are becoming more challenging than ever for Canadians to overcome," Peter Tzanetakis, president of the National Payroll Institute, said in a written statement.
In analysis accompanying the survey, the authors caution that “with interest rates, inflation and the cost of living all continuing to rise” many Canadians need to take “immediate and urgent action to keep from being overcome” by financial stress.
According to the survey, 66 per cent who report being financially stressed are living “paycheque to paycheque” and 50 per cent are “overwhelmed by their debt.”
The report also found that about 30 per cent of the respondents who reported being financially stressed earned more than $100,000 per year.
The authors said that the “damaging effects” of financial stress are “evident and serious both at home and at work.”
“An alarming 55 per cent of Canadians in the stressed cluster admit that they feel more isolated due to the rising costs of living,” the report read.
“They are also unable to keep their growing stress from affecting those closest to them, with one in two sharing that their financial stress has been felt by the ones they love.”
The report also found that stress over finances is “eroding productivity.”
About 40 per cent of those in the financially stressed category said that they have been unable to prevent financial stress from “negatively affecting their performance on the job.”
Tzanetakis said employers and those struggling with their finances should not stick their head in the sand.
"These results underscore how serious the storm is. Hoping that it will somehow pass or ignoring how it is affecting you – or, for employers, your business' bottom line – is not a solution and could even make the situation worse,” Tzanetakis said.
“On the contrary, immediate action is needed, including making some difficult choices with regard to financial habits, to weather what is still ahead."
The institute said employers should encourage staff to automatically direct a portion of their pay into a savings account and should invest in a system that prevents unintentional payroll delays.
“These steps from employers in combination with improved personal financial habits, will blunt the impact of the storm now and shorten its duration tomorrow,” the survey analysis read.
“But it won't be easy. Tougher times seem to be ahead.”