Australian household financial comfort has fallen due to the weakening labour market and the halt in income growth, according to ME Bank’s latest six-monthly Household Financial Comfort Index.
Household comfort amongst employment significantly declined in the past six months, with full-time workers recording a 3 per cent decrease to 5.9 out of 10, part-time workers down 4 per cent to 5.1, casual workers down 1 per cent to 5.02 and self-employed workers down 3 per cent to 5.6.
Consulting economist for ME, Jeff Oughton says: “It’s clear from the latest report that there are increased concerns around job availability and underemployment. The number of workers who felt it would be difficult to find a new job increased by 16 per cent to over one in two employees, which is the highest recorded since late 2016.”
The index recorded a 2 per cent decrease of working Australians that had an increase in annual income from 38 per cent in December 2018. In addition, households’ comfort with their incomes fell by 1 per cent to 5.7.
ME reveals more Australians are looking for more work hours with 35 per cent of part-time and casual workers seeking an additional 23 hours per week and over a quarter of employed Australians feel insecure in their current job.
Financial comfort across most of the 11 drivers that make up the index fell, with net wealth in seeing the largest drop, falling 3 per cent to 5.54 and ability to cope with a financial emergency, which fell slightly by 1 per cent to only 4.77 during the six months to June.
Oughton says: “The financial comfort of Australian households eased over the past six months, with a significant fall seen in comfort with wealth. Despite lower mortgage loan rates, expected cuts in personal income tax and higher local and global equity prices, this is largely a consequence of continued decreases in the value of residential property in many parts of Australia.”
The greatest financial worries recorded in the report were cost of necessities, at 44 per cent; followed by level of cash savings on hand, at 34 per cent; ability to maintain lifestyle in retirement, at 31 per cent; and impact of legislative change, at 19 per cent.
Financial comfort with investments in shares, super and property improved by 1 per cent and was the only driver to improve across the index.
Other winners include households that are not reliant on the government aged pension in their retirement, those with super balances greater than one million, young and middle-aged singles and couples without children, geared investors in residential property markets and New South Wales, Australian Capital Territory and Victorian residents.