Around 40% of Australians experienced some form of financial stress in the past three months, and that figure is significantly higher for young people and those on low incomes.
That’s the sobering news from the National Australia Bank’s (NAB) latest Consumer Anxiety Report, which found more than 50% of younger Australians aged between 18 to 29 had difficulty in buying food or paying bills in the past three months.
“Young people were hardest hit, with more than 1 in 2 (53%) experiencing some form of hardship,” the NAB said, adding that around 48% of 30-49 year olds also struggled with their finances.
“There was little difference between men and women, but low income earners not surprisingly faced more hardship than high income earners.”
This chart from the NAB shows the proportion of respondents who reported some form of financial stress in the latest survey, breaking the results down into individual categories.
According to the NAB, being unable to pay a bill caused the most distress among respondents, with one in five reporting difficulty within the survey. Within that component, one in three young people, and one in four low income earners, reported difficulty in meeting their obligations.
Perhaps even more concerning than that figure, the survey found 17% of Australians reported not having enough money for food and basic necessities, which jumped to 26% among young people.
It also found that around one in four young people also struggled to pay off personal loans over the past three months.
They’re shocking statistics, but not all that surprising given weak wages growth and elevated levels of youth unemployment.
According to data released by the ABS earlier this week, 12.7% of Australians aged 15 to 24 were unemployed in May, more than double the national average of 5.5%.
And while youth unemployment is historically more elevated than in other age groups, there has been a noticeable lift in this cohort in the years following the global financial crisis, rising from a cyclical low of 7.6% in August 2008.
And it’s been a similar story for youth underemployment, increasing from just above 10% before the GFC to more than 18% now.
Combined, labour market underutilisation among 15 to 24-year-olds — those unemployed or employed but who want to work more hours — now sits at 30.9%, again more than double the national average of 14.4%.
And on top of tough job market conditions for young Australians, wage growth — as measured by the ABS’ Wage Price Index — is currently sitting at the lowest levels on record, and going backwards in real terms.
According to research from UBS, a combination of record-low wages growth, higher petrol and utilities prices and out-of-cycle mortgage rate increases saw Australian household cashflow slump in early parts of 2017, perhaps contributing to the elevated levels of financial stress reported in the NAB survey.
“While low interest rates and falling petrol costs have softened the blow from slowing wage growth in recent years, with still low wages growth, and renewed rises across utilities, debt interest and petrol costs, household cashflow is now under significant renewed downward pressure,” the bank said.
Put another way, the combination of weak wage growth and higher costs are squeezing household finances, putting downward pressure on not only spending but also the ability to meet financial obligations.
Given those factors, particularly for younger Australians given tough labour market conditions, it’s little wonder that many Australians are finding it hard to make ends meet at present.