The holiday months are certainly some of the most joyous of the year, or at least, they should be. Unfortunately for many Australians, Christmas and New Years can be a particularly difficult time financially. There is an increased expectation to spend on friends and family. Adding to that is a plethora of deals that could help save money on various household purchases. Naturally, this leaves many in a slump come January, with potentially, a bucketload of new debt weighing them down in January. Not a great way to start the new year!
This situation will likely be exacerbated even further this time around as the impacts of COVID-19 continue to impact travel and the way most businesses operate. Furthermore, early paydays and time off over the break push many workers to a financially stressed January. Employers have, within their grasps, the tools to help ease the financial pressures their employees may begin to face.
Financial pressures and the impact of COVID-19
Australia has fared reasonably well compared to the rest of the world when it comes to COVID-19. Nonetheless, we still experienced our first recession in twenty years, and the impact of this should not be ignored.
Primarily, hundreds of thousands of jobs have been lost for the foreseeable future. The unemployment rate spiked from a very healthy 5.1% in February to a high of 7.5% in July. This number would have been far higher if not for the government’s JobKeeper program. As the program phases out over the tail end of 2021, it’s increasingly evident that employment levels will not return to their former glory anytime soon.
Interestingly, Australians have been aggressively attacking their personal credit, reducing their exposure to loans throughout the pandemic. While a good sign, the outlook is not. Personal credit reductions have largely been enabled by a blowout in government debt. With Christmas and peak spending season approaching, along with the roll off of government support, there is increasing pressure on personal finances once again.
Christmas expenses and the January hangover
Holiday spending is a severe problem for many Australians. This year, even in light of the pandemic, Australia’s retail sales are set to grow 2.8% on last year to over $54 billion. This consumer confidence may be misguided with over 7 million Australian’s reporting the dreaded Christmas debt hangover every year. On average, most of that debt will take until the end of February to pay off, with one in five of us taking until June. While celebrating Christmas and the New Year is a joyous occasion, it shouldn’t break the bank!
Employers can help with Earned Wage Access (EWA)
The pressure to spend while waiting for the next paycheque, especially during Christmas, is a recipe for disaster. Earned Wage Access (EWA) via mobile apps such as Paytime, allow your workforce to access their earned wages whenever they please, for a small charge less than the cost of a cup of coffee. EWA is not a loan – your staff are instead accessing a chosen portion of their already earned wages – there is no interest charged. EWA provides the much-needed liquidity many people need over the holiday season, easing the burden of unwanted credit and the dreaded January debt hangover.
If your business wants to enable your employees to improve their financial wellbeing, workplace engagement and productivity, contact Paytime today to arrange a free consultation.