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1.8 million Australian workers suffering prolonged financial stress, costing $31 billion in lost productivity
Super and retirement
12 November 2020
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  • 1.8 million Australian workers reported severe or moderate financial stress in 2020
  • Women significantly more impacted by financial stress than men
  • COVID-19 is causing three times the level of stress for those directly impacted, one in ten reporting positive impact on stress through the pandemic

AMP’s 2020 Financial Wellness research has found severe and moderate levels of financial stress are impacting 1.8 million Australian workers, with nearly half feeling financially stressed for an average of six and a half years or more. In total, 50 per cent of all Australian workers reported some level of stress about their finances.

The cost to Australia’s economy is $30.9 billion annually due to employee distraction and absenteeism – those severely and moderately financially stressed are ineffective at work for approximately 7.7 hours a week, and absent for a further 1.2 hours a week through sick days.

A systemic, long-term issue

The research, which has been conducted by AMP biannually since 2014, shows that financial stress has remained a systemic issue in Australian society. Those severely or moderately financially stressed have remained above or close to two million in every year the research has been completed, and the divide between the financially well and those stressed is getting wider.

Women continue to be more impacted

Approximately one in five female employees reported severe or moderate levels of financial stress in 2020, almost double the figure recorded for male employees (11 per cent). Younger women are particularly at risk, with 23 per cent of those aged 18 to 34 reporting severe or moderate levels of financial stress in 2020, almost three times the number of male employees (8 per cent) in the equivalent age group.

The impact of COVID-19

COVID-19 is amplifying financial anxiety for the 42 per cent of employees who perceive their finances to have been negatively impacted by the pandemic through business and employment disruption. These Australians report almost three times the financial stress levels of those who believe they haven’t been directly impacted by COVID-19. One in ten Australians, whose employment or business have not been impacted or in-fact benefited through COVID-19, are reporting a positive impact on their financial stress levels.

AMP’s modelling projects that if the impact of COVID-19 sees the number of people stressed increase by 10 points to 52 per cent, the additional cost to Australia’s economy caused by that stress could be up to $4.4 billion.

The leading cause of stress in Australia

Independent research confirms that financial issues are the top cause of stress among Australians, more so than any other trigger, including family dynamics and personal health[1]. More than a third of Australians find dealing with money, or even thinking about it, stressful and overwhelming[2].

Further findings:
  • Consistent with the impacts of COVID-19, the hospitality industry is experiencing the highest levels of financial stress, with 26 per cent of workers severely or moderately stressed. Retail is the second most affected industry at 23 per cent.
  • Geographically, regional South Australia has the highest rate of severely or moderately stressed workers at 26 per cent in the country, with the Northern Territory second at 23 per cent.
  • Financial stress is not exclusive to low income earners, with one in ten Australians who earn $100,000 or more experiencing severe or moderate financial anxiety.
AMP Director of Workplace Super Ilaine Anderson said:

“Australians continue to suffer the debilitating effects of financial stress, which is taking a huge personal toll on mental and physical wellbeing, particularly for younger women and single parents.

“This is spilling into work with stressed employees worried and distracted, and not performing at the levels they’re capable of, or they don’t turn up at all. The combined effect is costing Australian businesses billions each year.

“While COVID-19 is understandably creating significantly more anxiety for those directly impacted and blurring work and home life, the research – conducted since 2014 – shows that financial stress remains a systemic issue in Australian society.

The importance of education

“We know those who feel in control of their money are measurably less stressed, happier and more productive in the workplace. We also know that well-defined personal and family goals, and a plan in place to achieve them, can provide comfort.

“But employees also require the knowledge and knowhow to achieve their goals. And while more employees today than in previous years claim to have good financial intentions, they still often lack the tools, support, information and opportunity to take action. Access to financial education is essential.

The role of employers

“The research shows that financial education is one of the most used employee benefits when available. In fact, employees place an average value of $1300 on financial education provided by employers.

“Yet only 10 per cent of employees report that they’re being offered this kind assistance by their employer.

“There is a very real opportunity for employers to offer more financial literacy and education programs to their people, and increase awareness if they already exist  – to help them understand and engage with their finances, set goals, put plans in place, and then achieve their desired financial outcomes through informed decision making.

“The benefits will be seen through improved wellbeing, a more present and engaged workforce and, ultimately, in the performance of their businesses and wider economy.” 

AMP’s Financial Wellness programs

AMP’s Financial Wellness programs offer real support to our clients’ employees as part of our superannuation relationship. Employees have free access to education and insights to equip them with the knowledge and skills needed to manage money more effectively. AMP’s aim is to empower employees to make smart financial choices.

Good Shepherd partnership

AMP has partnered with the Good Shepherd to support those struggling with their finances before they find themselves in a financial crisis. Through a dedicated AMP line – 1300 054 500 – the program provides members of AMP employer super plans with access to free and confidential financial counselling services.

Seven tips to improve financial wellness
  1. Take action – utilise online resources and education programs provided by your employer to improve your understanding of key financial drivers, including superannuation, debt and cashflow management, insurance and investment principles.
  2.  Set goals and put a plan in place to achieve them – connecting finances with goals helps us engage with our finances, and then having a plan to achieve these goals can significantly ease stress.
  3. Create a budget that works for you – writing up a budget may take an afternoon out of your diary, but it will help you to more easily identify where there’s room for improvement. Then use one of the many budgeting apps freely available to track progress.
  4. Consider rolling your debts into one – rolling multiple debts into a single loan can reduce fees and interest. It also provides greater visibility and control over your finances.
  5. Set aside some emergency cash – an emergency resource of funds could give you peace of mind and reduce the need to apply for high-interest borrowing options should you be faced with an unexpected expense or new circumstances. 
  6. See if you can get a better deal with your providers – you more than likely have several product and service providers, and savings can be made by switching providers, which over time can amount to considerable benefits. 
  7. Don’t be afraid to seek financial assistance – if you are struggling to make repayments, you may be able to seek assistance from your providers by claiming financial hardship. All providers must consider reasonable requests to change their terms in instances where you may be suffering genuine financial difficulties. In addition, you can talk to a financial counsellor (free of charge) at the National Debt Helpline by calling 1800 007 007.

To access the research and more information about how to improve financial wellbeing visit www.amp.com.au/financialwellness

About the research

AMP’s Financial Wellness research is conducted by The Behavioural Architects, a global insight, research and strategy consultancy, specialising in the application of behavioural science. Insights were collected from more than 2,100 Australian employees between June and July 2020 and weighted to reflect Australia’s broader workforce, based on data from the ABS.

[1] Australian Psychological Society (2015): Stress & wellbeing: How Australians are coping with life

[2] Australian Securities & Investments Commission (2018): Australian financial attitudes and behaviour tracker

Contact details
Adrian Howard
+61 (0) 413 184 488
Adrian_Howard@amp.com.au
Contact details
Anjani Shyam
+61 433 496 704
Anjani_Shyam@amp.com.au