Majority of Aussie workers struggling to afford everyday expenses on their annual wage

22 February 2016

With wage growth currently at a record low, and incremental pay rises barely matching the escalating cost of living, the majority of Aussie workers are now battling to make ends meet. As a result, more and more Australians - particularly those who are young or poor - are falling into debt and being forced to rely on credit cards and loans.

A new Galaxy Research poll of 1,014 people nationwide, conducted on behalf of Fox Symes, the leading provider of debt solutions in Australia, found that 59 per cent of Australian workers are struggling to afford everyday expenses on their annual wage. Almost 2 million workers, or 16 per cent equally of both men and women, say they have not had a wage increase for several years. Some 24 per cent of men and 20 per cent of women also say they have considered changing jobs to seek out a higher wage.

“If wages remain flat and costs increase, this obviously places pressures on households,” says Fox Symes’ director Deborah Southon. “People are forced to get by with less purchasing power.”

In particular, wage stagnation is placing immense strain on several sectors - specifically, the ‘working poor’ with household incomes of less than $50,000. This sector is already under significant duress due to factors such as increased housing costs, supermarket price hikes, and current targeting by Centrelink for welfare overpayment which led to many being wrongly hounded due to system faults.

One in four (25 per cent) in this category admit they are struggling to cope with everyday costs such as electricity, health insurance and groceries on their yearly wage, with 19 per cent also straining to pay for housing. Households earning $50,000 - $100,000 are only slightly better off with 19 per cent scrambling to pay for day to day costs and 16 per cent doing it tough with rents and mortgages. Meanwhile only 7 per cent of workers from households earning over $100,000 say they struggle with basic necessities and 6 per cent with housing costs.

“The impact of wage stagnation is particularly noticeable for those in low income households,” says Ms Southon. “Any increases in everyday items such as utilities, food, petrol or rent are universally applied and little consideration is given to the repercussions on household incomes.”

The other main group really suffering are young Millenials and Generation Y workers. Those aged
18 - 34 (20 per cent) are doing the worst with general costs on low wages. The 18 – 24 sector also recorded the highest level of willingness to change jobs to try and make ends meet with almost half at 43 per cent keen to seek out higher paying jobs. Some 22 per cent in this category have already left jobs for better paid employment. A further 30 per cent of those aged 25 – 34 say they have considered changing jobs for more money compared to just 14 per cent of those aged 35 plus.

Families are also under the pump with more working parents (21 per cent) struggling to support
their families on their wages compared to workers without children (10 per cent). Almost one in four working parents (24 per cent) says they’ve considered switching jobs in order to attain a higher wage.

Wage stagnation and the pressure of everyday expenses has led to increasing debt levels throughout the nation. One in every 10 workers (10 per cent), or in other words 1.2 million people, say they have been forced to rely on their credit card due to their wages inadequately covering expenses.

Worryingly, despite the financial hardships, many are suffering in silence. Almost 1.4 million workers (11 per cent) facing real wage stress say they have been too embarrassed to seek out help regarding their finances.

Ms Southon says relying upon credit to fund your lifestyle is a real concern. “What few people consider when they use credit is that it is not their money and eventually they have to repay it plus the interest applied,” she says. “If you are struggling with debt don’t ignore it and let it spiral out of control. Talk to someone who can help. There is no need to be embarrassed.

“The primary reason people end up in debt is because they spend more than they earn. Budgeting is the key to managing money. It is smart to create a budget and even smarter if you stick to it.”

About the research The study was conducted by Galaxy Research between 18-22 August, 2016. The survey was administered online amongst a nationally representative sample of 1,014 Australians aged 18 years and older covering: NSW, ACT, VIC, TAS, QLD, SA and WA.

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