Income cuts, record high job insecurity and high rates of underemployment are putting stress on the finances of Australians.
The latest Household Financial Comfort Report by ME Bank shows a deterioration in “comfort with income”, which is at its lowest level since the Report began in 2011, at 5.55 out of 10.
Record low income gains highlight the gap between rich and poor
Only 32% reported income gains over the past year, one of the lowest levels since the first survey in 2011 and down from the corresponding figure of 38% 12 months ago.
Income gains were more likely to be reported by those with higher incomes.
Almost one in two (46%) of households with incomes over $100,000 reported being paid more compared to 17% earning under $40,000.
And 41% of those earning less than $40,000 reported income losses.
“The rich appear to be getting richer, while the rest of Australia is struggling — there’s a divide across households,” says ME consulting economist Jeff Oughton.
Households earning an annual income above $200,000 reported very high overall financial comfort of 7.10 out of 10 in December, compared with ME’s overall household financial comfort index of 5.41 out of 10.
“We’re seeing a shift in the composition of jobs as the economy moves away from mining and manufacturing with many employees leaving longer-term jobs and taking up lower-paying less-permanent jobs, which is having a negative impact on their financial comfort,” says Oughton.
Australian wages are growing at the slowest on record with the latest official numbers showing an annual increase of just 1.88%.
And Oughton says high levels of underemployment and record high job insecurity are also contributing to households’ historically low comfort with income.
“One in three Australian households (34%) reported job insecurity, a record high and an increase of 9 points over the year to December 2016,” he says.
And 56% of households felt that they would struggle to find a new job within two months if they became unemployed.
Despite Australia’s relatively low official unemployment rate of 5.8% in December 2016, ME’s Report shows 60% of part-time employees would like to increase the hours they work and 70% of casual workers want to change from casual to permanent employment.
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