Employers in Unique Position to Support Employee Financial Wellness
TORONTO, Nov. 7, 2018 /CNW/ - In support of Financial Literacy Month (#FLM2018) this November, the Canadian Payroll Association (CPA) is raising the alarm for employers, encouraging them to get involved in supporting their employee's financial wellness.
Workers Under Financial Stress
Results from the CPA's 2018 Employee Research Survey show that 46% of Canadian workers say that financial stress is impacting their workplace performance.
"Decreased productivity, absenteeism and high turnover are just some of the negative ways that stress arising from finances can affect employees," says Peter Tzanetakis, President of the CPA. "Employers are uniquely positioned to support employee financial wellness, either by offering them financial resources or methods to help employees save."
Currently, 53% of employees say their employer offers a 'Pay Yourself First' option, enabling workers to use automatic payroll deductions to divert source income into a separate savings or retirement account. Of those who have this option available, only 56% take advantage.
Evidently, many employees still take a hands-off approach when it comes to financial oversight. Only 36% of employees say they always review their pay statement. This may, in part, be because workers report a 94% confidence level in the accuracy of their pay, indicating a strong reliance on, and trust in, their payroll departments.
84% of employees indicate they would be interested in receiving financial education programs through the workplace, with four in ten indicating saving and planning for the future as their preferred topic for education. Ultimately, employers can leverage employee confidence in their payroll department to empower workers to improve their situation through financial programs. Making available and encouraging employees to take advantage of options such as automatic payroll deductions or financial literacy programs can prove to be a win-win for employee and employer.
Financial Situation Could Get Much Worse
Canadians continue to struggle with debt and savings, with the survey illustrating that 44% of Canadian workers are living pay cheque to pay cheque. While this figure is up from the post-2008 recession level of 59% when this survey was first conducted, Canadians continue to show worrisome trends regarding their finances.
A staggering 40% of Canadians feel overwhelmed by their level of debt, up 5% from last year, and more than one-third of survey respondents say their debt load increased over the year (up to 34% from 31% the year previously). The primary reason for growing debt is increased spending.
When asked about their major financial concerns, respondents note that a higher cost of living is most concerning, followed closely by worries about higher interest and mortgage rates. Most Canadians (96%) anticipate their cost of living will increase over the coming year.
Significant changes, such as an economic downturn or an increase in interest rates, could have a dramatic impact on workers ability to save, manage debt and plan for retirement. The Bank of Canada's decision to raise the benchmark interest rate five times since the summer of 2017 will not only make borrowing more expensive for Canadians, but could also create additional financial challenges for those with variable mortgages or whose mortgages are up for renewal.
Despite these ongoing financial challenges, Canadians still display strong avoidance when it comes to discussing their finances. Almost half of Canadians (47%) say they would feel uncomfortable taking about debt with their peers.
To help Canadians, and their employers, the CPA has developed several financial wellness resources. The Understanding Your Pay video, an informational video for new and young workers, can be used to help employees better make sense of their pay statement, deductions, and rights and responsibilities as a worker. The Pay Yourself First Guide for employees, teaches workers about financial wellness and provides insight into how they can access savings programs offered through their workplace. There is also information for employers on how to establish a Pay Yourself First program for employees in the workplace. The CPA encourages Canadians to access their financial literacy resources during Financial Literacy Month by visiting payroll.ca/financialliteracy.
About the Canadian Payroll Association:
Canada's 1.5 million employers rely on payroll practitioners to ensure the timely and accurate annual payment of $929 billion in wages and taxable benefits, $310 billion in statutory remittances to the federal and provincial governments, and $180 billion in health and retirement benefits, while complying with more than 200 federal and provincial regulatory requirements. Since 1978, the Canadian Payroll Association has annually influenced the payroll compliance practices and processes of over 500,000 organizational payrolls. As the authoritative source of Canadian payroll compliance knowledge, the Canadian Payroll Association promotes payroll compliance through education and advocacy.
SOURCE Canadian Payroll Association
For further information: Alison Rutka, Communications Specialist, [email protected], 416-487-3380 x 125