TORONTO--(BUSINESS WIRE)--The National Payroll Institute is sounding the alarm – Canada needs to take immediate action to improve the declining financial wellness of workers from coast to coast. Because even as inflation has slowed and interest rates have dropped, results of the 16th Annual National Payroll Institute Survey of Working Canadiansi reveal that the financial stress storm that the Institute has been tracking since 2021 continues to intensify.
The survey, which was analyzed by the Financial Wellness Lab of Canada using machine learning, reveals a significant increase in financial stress among working Canadians. As has been the case for each of the last five years, the analysis shows that working Canadians belong to one of three clusters: financially coping, financially comfortable, or financially stressed.
However, this year's results show that the proportion of individuals in the stressed cluster has risen to 41 per cent from 37 per cent in 2023, while the comfortable cluster has decreased from 32 per cent to 28 per cent.ii One in four survey respondents shared that they are living paycheque-to-paycheque and would find it challenging to meet their financial obligations if their pay were delayed just one week.
"These results are a stark reminder of the growing financial pressures Canadians face," said Peter Tzanetakis, President and CEO of the National Payroll Institute. "The increase in financial stress reflects real struggles impacting individuals, families, and workplaces across the country that cannot be ignored. Employees, employers, and policymakers all have a role in improving financial wellness."
While financial wellness is a complex problem, two major factors are contributing to increased financial stress this year: overreliance on debt and soaring housing costs. In fact, 77 per cent of the stressed cluster and nearly half of all respondents feel overwhelmed by debt, with 89 per cent of the stressed group and 72 per cent overall are worried about rising housing costsiii. Nearly 60 per cent of those in the stressed cluster are spending over 40 per cent of their income on housing.iv
The Impacts of Financial Stress on Working Canadians
The impacts of financial stress extend far beyond individual concerns — seriously affecting family dynamics, social connections and workplace productivity.
When it comes to impacts at home, 66 per cent of those in the stressed cluster admit financial stress has harmed their relationships, with 16 per cent admitting they have lashed out at others because of their financial burden. In addition, the Lab's analysis found 36 per cent of the stressed cluster, compared with 24 per cent of all survey respondents, have become more socially disconnected. Twenty-three per cent of the stressed cluster reported losing sleep due to finance-related anxiety.v
The reality is not much different in the workplace. Fifty-six per cent of workers reported that financial stress has a negative effect on their performance. Forty-five per cent of workers surveyed say they spend at least 15 minutes per day thinking about their finances on the job – and one out of every 20 respondents spend more than 90 minutes daily. Added together, time spent worrying about finances at work equates to $53.9 billion in lost productivity each year. This is up from $46 billion in 2023, $40 billion in 2022, and $27 billion in 2021.vi
The National Payroll Institute issues a wake-up call
Contrary to what one might expect in light of the impacts that financial stress is having, a growing number of Canadians remain optimistic about their financial future. However, the National Payroll Institute warns that this false optimism must not lull Canadians into complacency. Without decisive action to improve financial wellness habits relating to debt, saving and spending, there is little reason for optimism.
"Overwhelmingly, the data captured within the survey underscores the financial hardships faced by working Canadians, so it's hard to accept the optimistic outlook of respondents as anything more than a dream that is likely to be deferred," says Tzanetakis. "The data tells us that hope should only be found in taking action to improve financial habits related to debt and spending."
All individuals, employers and government leaders need to take urgent action to improve the financial health of working Canadians from coast to coast. The growth of the stressed cluster and the growing distance between those who are stressed and those who are comfortable are trends that need to be reversed before the weight of stress experienced becomes too much to bear.
"Canadians are struggling. There is no doubt about that," adds Adam Metzler, Lead Researcher at Canada's Financial Wellness Lab and Associate Professor at Wilfrid Laurier University. “We must act now and work together to create a more secure and financially stable future for all Canadians."
The Financial Wellness Lab's analysis has consistently shown that those in the financially stressed cluster can move toward the financially coping or even comfortable clusters by focusing on saving as much as possible, reducing reliance on debt and spending less.
There is no question that earning more may also help, but unlike spending, debt and saving, the analysis each year has shown that how much one earns is not determinative of one's state of financial well-being. The survey, which includes only employed Canadians, found that 29 per cent of those who earn $100,000 or more each year are still living paycheque to paycheque.
As part of the wake up call, the National Payroll Institute encourages all levels of government to work with experts – including researchers at the Financial Wellness Lab of Canada – to focus efforts to improve financial wellness through a structured, comprehensive and consistent strategy. This strategy needs to go beyond financial literacy to include research-based tools and resources to support Canadians in moving toward long-term stability.
About the National Payroll Institute
The National Payroll Institute champions payroll in Canada as being vital to the health of businesses across Canada by setting THE professional standard of excellence and sharing critical expertise. We provide the knowledge and resources that more than 40,000 payroll professionals need to realize their potential, 1.5 million employers depend on for the annual payment of $1.06 trillion in wages and taxable benefits, and that governments rely on to receive $364 billion in statutory remittances to fund critical programs each year. The Institute's designations are recognized as the gold standard for expertise and professionalism, and the only such designations for payroll in Canada.
About Canada's Financial Wellness Lab
Analysis of the 16th Annual Survey of Working Canadians was performed by Canada's Financial Wellness Lab, who are dedicated to developing quantitative finance and data analytics solutions that will enable Canadian households to enhance their financial resilience. Financial wellness and resiliency are complex topics that have been studied by a number of disciplines. In addition to the mix between subjective and objective variables, research has been hampered to date by data inaccessibility. This is a result of proprietary data in this arena often analyzed within a particular agenda. The Lab solves for these issues as it encompasses a plethora of granular data sourced historically and, moving forward, in real-time. With the assistance of machine learning, they examine these data sources and look for subtle relationships and trends that have not been previously studied.
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i The 16th Annual National Payroll Institute Survey of Working Canadians: An online survey of 1,500 working Canadians (80 percent of whom are full-time employees) was completed between July 2, 2024 and July 16, 2024, using a Framework Analytics online panel. The survey is consistent with a margin of error of plus or minus 2.5% 19 times out of 20, but as a non-probabilistic methodology was used, a definitive margin of error cannot be expressed. The data was not weighted.
ii (2024) The 16th Annual National Payroll Institute Survey of Working Canadians: An online survey of 1,500 working Canadians, Page 3
iii (2024) The 16th Annual National Payroll Institute Survey of Working Canadians: An online survey of 1,500 working Canadians, Page 9
iv (2024) The 16th Annual National Payroll Institute Survey of Working Canadians: An online survey of 1,500 working Canadians, Page 9
v (2024) The 16th Annual National Payroll Institute Survey of Working Canadians: An online survey of 1,500 working Canadians, Page 11
vi (2024) The 16th Annual National Payroll Institute Survey of Working Canadians: An online survey of 1,500 working Canadians, Page 11
