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 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.
Living Paycheque to Paycheque
The majority of Canadian workers continue to live paycheque to paycheque, with 59% (same as last year) saying they would be in financial difficulty if their paycheque was delayed by a week.
"The most significant result of Canadians continuing to live paycheque to paycheque is its impact on their concerns about personal finances and retirement," notes Cindy Forget, CPM, Chairman of the CPA. "The results also underscore why it is vital for organizations to ensure employees are paid on time."
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).
Sixty-two percent (62%) of respondents indicated it is likely they will get a salary increase over the next twelve months (an increase of 3% from 2009).
However, the vast majority of employees (83%) expect their cost of living will increase in the next twelve months (the same as last year). They are split on whether their salaries will keep pace with inflation – 39% saying they'll likely keep up, and 38% saying they will likely fall behind. Only 7% feel any salary increase will exceed the cost of living.
Cash is still king for Canadians when it comes to remuneration with 61% of those who responded saying receiving higher wages from their employer is most important, significantly outpolling other choices of: better retirement benefits (20%), more health benefits (13%), and education funding (6%).
Almost three-quarters (72%) of Generation Y (18-34) are looking for better wages (a 5% increase from 2009); while almost 40% Baby Boomers (55-65) favoured more retirement benefits.
Savings Still Low But Increasing
The survey also found that 47% of Canadian workers are saving 5% or less of their net pay as compared to 50% last year. However, 18% of Canadians are saving more, with a 5% increase in the number of individuals who are saving 16% or more of their paycheques.
Financial planning experts generally recommend a retirement savings rate of about 10% of net pay. They also recommend that people have approximately three months of expenses (rent, mortgage, bills, groceries, etc.) as an emergency fund.
Sixty percent (60%) of Canadian workers said they have been trying to save more money than a year ago (a 2% increase). Yet, over half of workers who are try to save more (33%) have been unsuccessful in doing so. Forty percent (40%) say they are not even trying to save; which is surprising when 1 in 2 employees (52%) feel they will need between $750,000 and $3 million to live comfortably in retirement.
Those finding it most difficult to put money aside are single parents, with 58% saying they're saving 5% or less of their net pay.
"If I won a million dollars, I'd… pay down debt"
The overwhelming majority of respondents (81%) say their first or second priority if they were to win $1 million from a lottery would be to pay off their debt. This is an 11% increase from last year, indicating that more Canadians are concerned about their debt load than they were a year ago.
There was a 24% increase in the percentage of Canadians (44%) saying they would buy a house (or a new house) with their winnings. The third most common use of a million dollar windfall would be to contribute as much as possible toward retirement (42%); this was a 7% increase from last year. The fourth most popular use of lottery winnings was investing at 35%.
After paying down debt, different age groups would use their windfall in different ways. Members of Generation Y (18-34) are more likely to save money in order to purchase a home (53%); while Baby Boomers (55-65) say they would top up their retirement funds (50%) and share their winnings with their families (63%).
Concerned About the Economy
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.
"We're surprised by the drop in optimism because last year's survey was in the middle of the recession," says Patrick Culhane, President & CEO of the CPA.
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 --------------------------------------- - 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.
Electronic Pay Statements
One quarter of employees (24%) like the electronic pay statements they receive from their employers, an increase of 11% from 2009. Another 23% indicated that if electronic pay statements were offered it would be easier for them, while 27% stated they would be fine with them.
"Since the majority of Canadians are using online banking now, we were not surprised that employers are offering electronic pay statements and employees like them," notes Forget.
A small number of respondents (5%) indicated that they do not like the electronic pay statements they currently receive. Ten percent (10%) felt it would be an inconvenience and 11% worried about their personal financial information.
The Association encourages employers to use tools such as the CPA Pay Statement Guidelines to ensure pay statements – whether electronic or paper – provided to employees have appropriate information and that organizations' policies and procedures are in compliance with employment and labour standards.