Canadians living from paycheque to paycheque
A major national survey of working Canadians shows that employees continue to live paycheque to paycheque. They are concerned about how interest rates and the economy will affect their personal finances and retirement.
The 2nd annual National Payroll Week Employee Survey, conducted by the Canadian Payroll Association (CPA), found that:
- The majority of Canadian workers continue to live paycheque to paycheque, with 59% saying they would be in financial difficulty if their paycheque was delayed by a week.
- Sixty-two percent (62%) of respondents expect a salary increase but the vast majority (83%) also expect their cost of living will increase in the next twelve months.
- Almost half (47%) are saving only 5% or less of their net pay. Financial planning experts generally recommend a retirement savings rate of about 10% of net pay.
- The overwhelming majority (81%) say their first priority if they were to win $1 million from a lottery, would be to pay off their debt.
- While 59% feel the economy in their city or town will improve in the next year, this was down from 67% in 2009. Workers in Ontario, Quebec and the Atlantic provinces are less confident about their local economies.
- Two in three working Canadians (69%) say it would be difficult to find comparable employment with a similar salary if they lost their job.
- One quarter of employees (24%) like the electronic pay statements they receive from their employers; an increase of 11% from 2009.
By age group, the younger workforce is having the greatest trouble meeting their current expenses, with 65% of those aged 18-34 saying it would be very difficult, difficult or somewhat difficult for them to meet their current financial obligations if they missed even one paycheque.
By household, the situation is most precarious for single parents, with 76% saying they would have some trouble making ends meet if their pay were delayed (a 4% increase from last year).
When asked to rank issues facing the economy and personal finances, employees across the country cited the greatest concerns as, in order, higher interest rates, not being able to save for retirement, inflation and falling back into a recession were their top concerns.
Ranking of Economic Issues by Canadians
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- First or most frequently mentioned concern: Higher interest rates
- Second concern: Not being able to save enough to retire comfortably
- Third concern: Inflation
- Fourth concern: Falling back into a recession
- Fifth concern: Loss of my job
- Sixth concern: A decline in the value of my house
Generation Y (18-34) stated they were most concerned about the prospect of higher interest rates (55%); while Generation X (35-54) are most worried about not being able to save enough to retire comfortably (54%).
Two in three Canadians (69%) say it would be difficult to find comparable employment with a similar salary if they lost their job. Forty percent (40%) said it would likely take over six months to find a comparable job. Another quarter (26%) believes it would take them between 3 to 6 months to find a similar job, and 9% felt they would never find a comparable job.
The numbers are even higher in certain areas and among certain groups. Baby Boomers (82%) and employees from Ontario (75%) and the Atlantic provinces (73%) are most concerned about finding a comparable job with a similar salary.
