Working Canadians report jump in financial stress and need urgent help

National Payroll Institute research shows how challenging it's become to keep on top of finances

Working Canadians report jump in financial stress and need urgent help
Steve Randall

Working Canadians are struggling to keep on top of their finances with rising debt burdens and reduced savings creating a worrying picture of the nation’s financial wellbeing.

New research published today (Oct. 3) by the National Payroll Institute reveals a 20% year-over-year jump in the share of workers whose situations classify them as ‘financially stressed’ taking the overall total to 37%.

And this is not limited to lower income workers, the data shows that 35% of the growing stressed cluster earn more than $100,000 per year, but if their debts are running away from them then the level of debt combined with higher interest rates adding to servicing costs, is severely stressful.

The Institute’s Annual Survey of Working Canadians conducted by Canada’s Financial Wellness Lab has consistently found that reducing debt, saving more and spending less are the primary factors determining if individuals are financially comfortable, coping or stressed.

The pandemic forced increased saving and a lower rate of financially stressed workers, but that appears to have been the calm before the storm with a negative trajectory in the past two years.

“The frightening reality of this storm is that the contributing factors to financial stress are becoming more challenging than ever for Canadians to overcome,” said Peter Tzanetakis, president of the National Payroll Institute. “With interest rates, inflation, and the cost of living all continuing to rise, for many working Canadians navigating these factors have negatively impacted their financial wellness, and they need to take immediate and urgent action to keep from being overcome.”

The study found that saving money has never been harder in the past decade with 63% of respondents spending everything they earn and 30% spending more than their pay and taking on more debt.

Four in ten respondents admit that their financial situation is affecting their performance at work and the average Canadian worker spends 33 minutes daily worrying about their finances while at work, while 1 in 5 have taken sick days due to their finances, and 1 in 10 have left their job altogether.

Immediate action required

Individuals that are struggling with the cost of living cannot ignore what’s happening to their finances and businesses should consider how they might be able to help their employees and in turn reverse lost productivity due to financially stressed workers.

"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,” said Tzanetakis. “On the contrary, immediate action is needed, including making some difficult choices with regard to financial habits, to weather what is still ahead.”

For employers, there are tools available including the National Payroll Institute’s Financial Fitness Evaluator for Business which enables employers to gauge the aggregate state of financial stress among their workforce and then implement appropriate solutions.

Other things that employers can do include encouraging employees to auto-save some of their wages, which can be done by payroll, and reducing the potential for unintentional payroll delays.