One in four Canadians is overwhelmed by their level of debt—a 5 percent increase from 2017, according to a new survey from the Canadian Payroll Association (PCA).
More than one-third of survey respondents (34 percent) claimed that their debt increased over the last year, largely due to increased spending. Most (96 percent) believe the cost of living will go up in the coming year, which is one of their biggest financial concerns. Canadians are also fearful of higher interest and mortgage rates.
Forty-six percent of Canadian workers also say financial stress negatively affects their performance at work
“Decreased productivity, absenteeism and high turnover are just some of the negative ways that stress arising from finances can affect employees,” Peter Tzanetakis, President of the CPA, noted in a release. “Employers are uniquely positioned to support employee financial wellness, either by offering them financial resources or methods to help employees save.”
Forty-four percent of survey participants say they live pay cheque to pay cheque. While this is an improvement from the post-2008 recession level of 59 percent, it is still concerning and prevents many workers from saving money.
An increase in interest rates or an economic downturn could be devastating for some workers, who struggle to manage their debt and want to retire, notes CPA. In addition, since the Bank of Canada accelerated the interest rate five times since summer 2017, borrowing has become more expensive and it can make it challenging for people with variable mortgages or mortgages up for renewal.
CPA offers several resources to help Canadians and their employers deal with financial issues. They have an informational video for new and young workers as well as the “Pay Yourself First Guide” to help workers access saving programs at their place of employment.
Fifty-three percent of workers said their employers have “Pay Yourself First” programs, allowing payroll to automatically deduct a percentage of their income and place it into separate savings or retirement account. However, only 56 percent of workers use the program.
Financial oversight is not a top priority for many workers. Just 36 percent review their pay statements, and a majority are confident the payroll departments are paying them accurately.
Still, 84 percent of employees would be interested in participating in financial education programs at their place of work. Forty percent noted that saving and planning for the future would be the top favoured topic of discussion.