Women experience greater barriers to achieving financial wellbeing than men. In today’s analysis, David Prior and Imogen Morgan of Good Shepherd Australia New Zealand (@GoodShepANZ) and Michael Joyce from Financial Inclusion Action Plan (FIAP) explore how existing workforce gender inequalities were magnified during the COVID-19 pandemic, and the role employers can play in supporting their employees’ financial wellbeing.

Financial wellbeing is integral to general wellbeing

What is financial wellbeing?

Financial wellbeing is “the extent to which someone is able to meet all their current commitments and needs comfortably and has the financial resilience to maintain this in the future.” An individual’s financial wellbeing can be measured through various metrics such as, ability to meet bills and budget, debt management, ability to meet unexpected expenses and savings habits.

Financial wellbeing is a core component of overall wellbeing

In the last few decades employers have increasingly recognised the value of supporting their employees’ physical and mental wellbeing. However, employees’ financial wellbeing is an often-overlooked domain. This is a concerning oversight given the cost of financial stress to organisations and the relationship between financial wellbeing with other domains of wellness:

It is estimated that financial stress costs organisations in Australia $66.8 billion a year in lost productivity through absenteeism and distraction.
People dealing with financial challenges are at least twice as likely to face mental health issues than others

As such, if employers wish to holistically address the wellbeing of their employees, financial wellbeing must be a key component of any workplace wellbeing strategy, in parallel with physical and mental health.

A woman is sitting on a swing, over a large chasm — Women’s financial wellbeing is more precarious than men’s

Employed women’s financial wellbeing is more precarious than men’s

Employed women experience more barriers to maintaining and improving their financial wellbeing compared to men, especially due to the gender pay-gap, currently sitting at 14.1 per cent. The gender pay-gap has implications both for women’s current financial circumstances, and their future financial security. Due to the pay-gap women tend to earn less overall than men, which inherently causes lower accumulation of superannuation and reduces women’s ability to save. For those wishing to learn more about the gender pay-gap and communicate it, WGEA have a helpful resource.

A woman is closing up a restaurant at the end of a day — Women were more likely to work in industries affected by the COVID-19 pandemic

Recent events hasten the imperative for financial wellbeing in the workplace

The rising cost-of living in Australia has further compounded financial stress caused by the global COVID-19 pandemic. Given the negative outcomes for organisations and employees, triggered by financial stress, the current environment should invite workplaces to implement further financial wellbeing strategies.

Women employees were affected by the pandemic

Women were particularly financially affected by employment changes because of the pandemic. This can be attributed to sectors with higher female participation rates such as hospitality and caring professions losing more hours and jobs, and women being more likely to withdraw from employment to care for children. Women were also less likely to receive government support because JobKeeper did not include short-term casuals, the majority of whom are women, and the earlier removal of part-time workers from the program, who are twice as likely to be women . Negative changes to employment and less support during the height of the pandemic have immediate and long-term implications for women’s financial security.

Figure 1: Hours worked by gender, indexed to March 2020 (ABS)

The pandemic intensified existing inequalities

Research highlights that women were more impacted by job loses during the pandemic as industries that comprise higher levels of female employment were hardest hit by job loses during the pandemic.

Women’s participation rate in the Australian workforce is always lower than men. This is for varied reasons particularly women bearing a higher burden of unpaid work including caring for children.

Whilst men lost more jobs and hours overall during height of the pandemic compared to women, Figure 1 shows that women were disproportionately affected by hours lost during the height of the pandemic compared to men when analysed as a percent of pre-covid employment hours worked for each gender – a far better indicator of inequity.

Women are more likely to be primary carers

Women are more likely to have responsibility for looking after children under the age of 15 (88.6 per cent) than men (73.4 per cent). Single parents are disproportionately women (82.8 per cent) and women with children under the age of 14 have a higher prevalence of exclusion from the workforce compared to men, particularly women in single parent households compared to single parent male households. All these factors contributed to employed women with dependents being more impacted by the pandemic than men. With children largely unable to attend childcare, schooling and other arrangements during the pandemic, it was more often the female care-giver who reduced their paid employment to do unpaid work minding children and supporting home schooling. As such, lockdowns disproportionately impacted women’s ability to participate in the paid workforce which had a subsequent deleterious influence on women’s financial position.

Figure 2: Annual change in the consumer price index (CPI) by percentage (Adapted from the ABS)

Rising costs of living are impacting all Australians

Further compounding the negative employment circumstances from the pandemic is the largest annual rise in cost of living in ten years. It appears to be trending upwards, as measured by the consumer price index (CPI).

Inflation and the rising cost of living may hit women harder

The gender pay-gap means that women may experience more financial stress caused by inflation than men, as the cost of living takes up a greater proportion of their income.

Part time employed single parents, who are mostly women, are facing rental affordability issues

Housing is generally the greatest expense an individual has. Whilst the pandemic offered marginal rental relief, single parents working part-time, who are predominately women, are increasingly facing “severely” and “extremely” unaffordable rents. A study by Anglicare in April 2022 found that just 1.6 per cent of rentals in Australia were affordable for someone earning the minimum wage, and 0.1 per cent (61 houses nation-wide) were affordable for a single parent on the Parenting Payment Single.

Because women earn less than men, essentials like groceries, petrol, and heating cost a larger proportion of their income — Due to the gender pay gap, women pay a higher proportion of their income towards essentials. Image courtesy of the Workforce Gender Equality Agency (WGEA)

The time is right for employers to act and further support employees’ financial wellbeing

Recent financial stressors experienced by employees, caused by the pandemic and cost of living rises, should hasten employers’ further implementation of targeted financial wellbeing strategies – with a particular focus on women. Issues caused in the workplace by financial stress, such as lower productivity and overall wellbeing, suggest financial wellbeing initiatives in the workplace would have positive outcomes for both employees and employers.

What is the current state of employee financial wellbeing in Australia?

The State of Employee Financial Wellbeing report provides one of the most recent and comprehensive insights into attitudes of employees and employers on financial wellbeing within Australian workplaces. A selection of the key findings are summarised below.

Many employees are financially struggling, and women are more impacted than men

Almost 30 per cent do not have enough money for food and regular expenses
Less than 50 per cent are able to save regularly
40 per cent struggle to meet bills and commitments from time to time
Women employees are more likely to have saving habits though are less likely to be able access $500 in an emergency

Unsurprisingly, the research found that employees in lower income brackets reported a greater struggle to pay bills, and a lower level of financial stability compared to those on higher incomes.

“Overall, women are..…disproportionately represented in the lower income bracket due to the gender pay gap and other gendered socio-economic factors. These should be a focus of system-wide change not only [workplace] financial wellbeing supports.” - State of Employee Financial Wellbeing report

There is a disconnect between employers and employees on financial wellbeing offerings in the workplace

58 percent of human resources (HR) professionals report that their employer offers financial wellbeing support. However only 36 per cent of employees agree with this statement, indicating that employees may not be aware of available supports. Around one in two employees say they would think more favourably of their employer and be more likely to stay if offered a financial wellbeing program

Interestingly, the report found women were less likely to respond that their employer offered financial wellbeing supports compared to men. The reasons for this were unable to be investigated from the data collected, but the finding raises questions about how financial wellbeing strategies within the workplace are targeted to engage men versus women, and whether more inclusive practices are required.

Closing the gender pay-gap makes a difference

Although not an original intention of the research, data analysis exposed that gender within income brackets was statistically unlikely to predict responses to financial stress measures by employees. Income was generally the only statistically significant predictor of financial stress – people in higher income groups report reduced financial stress than those on lower income groups, irrespective of gender. However, the research did reveal that women were disproportionately represented in lower income groups which suggests closing the gender pay-gap may promote financial wellbeing equality across gender.

What does this mean?

The impact financial stress has on employees’ wellbeing and productivity, inequitable financial pressures experience by employed women, and the overwhelming desire for financial wellbeing support by employees in the workforce suggests the need for employers to further contemplate their role in supporting employees’ financial wellbeing as a vital facet of overall wellbeing. Such strategies should acknowledge the unique challenges that exist for women’s financial wellbeing. Therefore, employers should work collaboratively to find appropriate supports within a workplace wellbeing program that meet the needs of women.

The reader is encouraged to look at further resources on how the issue of women’s financial wellbeing can be addressed through practical actions and advocacy. Financial inclusion Action Plan (FIAP) provide a useful resource that offers practical steps that can be taken at an individual, organisational and systemic level to hopefully improve the current situation. As with any pragmatic policy intervention, multiple levers across a range of levels will need to work in conjunction to solve the complex and multifaceted issue of women’s financial wellbeing in the workplace - all which take zeal and audacity.

This post is a part of the Women’s Policy Action Tank initiative to analyse policy using a gendered lens. View our other policy analysis pieces here.

Posted by @PNagorckaSmith

Employee financial wellbeing for women in Australia