Lockdowns, operating restrictions, and simultaneous supply and demand shocks have severely impacted the arts, recreation, food, accommodation and retail industries, necessitating job cuts. A major report now reveals that workers in these industries are also the least financially aware in their decision making, and have lower financial health – reducing their ability to weather the economic storm.
The finding comes from the third annual Financial Consciousness Index (FCI), commissioned by comparethemarket.com.au and developed by Deloitte Access Economics. The FCI surveyed 3015 individuals on a range of factors that make a person financially conscious – from financial sophistication and willingness to financial wellness and capability.
Aussies in higher-skilled occupations are more financially well than lower-skilled workers
Financial wellness is the degree to which people feel they can meet expenses, have money left over to save and feel financially secure. The FCI report reveals that 37 per cent of arts, recreation, food, accommodation and retail workers struggle to pay their bills. This is significantly more than the 29 per cent of workers in the highly-skilled financial, insurance, mining, professional, scientific and technical industries who struggle to pay their bills.
Workers in the higher-skilled industries also demonstrate better financial consciousness on average. Nearly two-thirds (64 per cent) of workers in professional, scientific and technical services and a third (33 per cent) of those in financial and insurance services save 20 per cent or more of their income each pay cycle after paying bills. On the other hand, 28 per cent of respondents in arts and recreation services, 23 per cent in food and accommodation services, and just 13 per cent of those in retail save 20 per cent or more of their income.
David Ruddiman, comparethemarket.com.au General Manager of Digital Banking, says: “The data indicates that Aussies in the hospitality, creative and arts industries, who are generally considered to receive a lower income, are less able to save and make financial decisions. They also make up a higher proportion of those who have been laid off due to COVID-19, with 27 per cent of food and accommodation services workers having lost their jobs. Many workers in these sectors are also on JobKeeper payments – 36 per cent in arts and recreation services, 25 per cent in food and accommodation, and 13 per cent in retail – or have had their hours reduced. As a result, they are less able to safeguard themselves against a prolonged economic downturn – especially if other areas experience a second shutdown like much of Victoria.”
Financial consciousness is lower among industries that saw significant revenue loss
The findings also reveal that industries where financial consciousness is lower, are also the industries that have seen the greatest revenue reductions and job losses during the pandemic. Between the national ‘shutdown’ months of March and May, job and revenue losses were experienced most in accommodation and food services: 293,000 jobs were lost, and more than half (53 per cent) of the industry had a 50 per cent or more loss in revenue.
The arts and recreation industry lost 87,770 jobs and 46 per cent of the industry lost more than 50 per cent of its revenue. In contrast, the finance and insurance services industries saw an increase of 20,355 jobs, and just three per cent of the industry saw a 50 per cent or more loss in revenue. Overall, these figures indicate that workers in struggling industries are more at risk to the economic downturn.
Aussies in higher-skilled occupations scored at least 10 points higher for financial consciousness
Comparethemarket also tested individuals for financial consciousness – which measures people’s belief in their ability to control their financial outcomes, as well as their capability and willingness to make changes. It found that those in mining, finance, insurance, professional, scientific, technical, rental, hiring and real estate services scored an FCI score of 58-61 – significantly higher than the national average of 51. The high level of technical knowledge and skills required to carry out a job may be transferrable skills that Aussies can apply to personal finances.
In contrast, Aussies working in accommodation, food, retail, arts and recreation services scored 50-51, at least a 10-point difference. The data suggests that workers in industries that offer services to the mass consumer market have a lower financial consciousness on average, likely because of education, training and experience required to enter professions within these industries.
David says: “These industries hardest hit are also characterised by a high proportion of casual workers, whose employment can be easily paused or terminated with few financial disadvantages for the business. This connection between employment status and occupation on an individual’s level of financial consciousness is also reflected in the FCI scores of full-time employees (score of 56), compared with 51 for part-time and casual workers.”
Higher job security correlates with greater savings
The FCI report also indicates that those who feel most secure in their jobs also save more, not the other way around. Three-quarters (73 per cent) of those in financial and insurance services said they feel confident in their job, compared with 62 per cent of retail workers and 55 per cent in food and accommodation services.
David says: “This year’s Financial Consciousness Index has shed light on how occupation and skills required for work can influence an individual’s ability to meet their expenses and save, as well as their financial consciousness overall. Higher-skilled industries often require critical thinking and problem-solving – skills that can transfer to well-informed actions within the context of our personal finances.
“With a concerning number of Aussies on JobSeeker and others on reduced hours, Australians should review their own financial situation and see if they could save on general household expenses. Particularly in this economic environment, it’s crucial more people engage with their personal finances to better protect their financial security over the long term.”
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