In today’s cost-of-living crisis, financial stress has quietly become one of the most significant barriers to workplace productivity and employee wellbeing. In 2024, AMP found that nearly one in two Australian workers are experiencing financial stress, with one in four stating it affects their ability to perform at work effectively. The ripple effects of financial stress are far reaching, from absenteeism and low engagement to increased turnover.
As businesses search for strategies to improve employee performance, morale, and retention, financial wellness programs have emerged as a high-potential avenue. Employees are no longer strung on the typical perks, like gym memberships and team lunches, instead, they are now seeking genuine wellbeing and financial support. Employees want solutions that address the everyday pressures of living pay-to-pay, juggling debt, and preparing for unexpected expenses.
In this blog, Paytime explores how financial stress directly impacts productivity and employee retention, and how modern financial wellness programs, such as earned wage access (EWA), can be part of the solution.
The State of Financial Stress in Australia
Financial stress isn’t a personal issue, it’s a business issue. The AMP 2024 report found that financial stress has spiked, with 42% of respondents experiencing mild financial stress, 15% moderate stress, and 8% severe stress. In the workplace, this stress manifests as distraction, anxiety, fatigue, and in some cases, poor mental wellbeing which leads to time off or reduced performance.
When employees are worried about making rent, covering health bills, or childcare expenses, their cognitive bandwidth shrinks massively. This concept, known as the scarcity mindset, is well-documented in behavioural economics. The brain becomes so preoccupied with short-term survival that it struggles to focus on long-term tasks, let alone strategic thinking, calculations, or collaboration.
The 2023 PwC Employee Financial Wellness Survey found that financially stressed employees are twice as likely to look for a new job and four times more likely to admit their money worries have negatively impacted their work. While these findings are U.S.-based, the trend is consistent with Australian insight and highlights that financial pressure is reducing productivity.
In fact, according to AMP’s 2020 research, it’s estimated the cost to Australia’s economy is $30.9b annually due to employee distraction and absenteeism.
Financial Wellness & Employee Productivity
It’s often difficult to shake what is going on in your personal life when you step into the office, and that includes financial stress. When employees are struggling to make ends meet, the emotional toll follows them into work, which has very real consequences for businesses.
Research by AMP found that financially stressed employees in Australia lose, on average, 6.9 hours of productive work each week, either by being absent or disengaged. That’s nearly a full working day lost per employee, every week. Multiply that across a workforce and the cost to the business becomes substantial.
Financial stress can also impair decision-making, reduce creativity and innovation, and increase the likelihood of errors. In industries where safety is paramount, such as construction and healthcare, these errors can come with huge repercussions.
Unshockingly, when employees feel financially secure, they’re more likely to be engaged, focused, and resilient.
Financial wellness initiatives, particularly those that provide immediate, tangible relief, can help restore mental clarity and workplace engagement. When people aren’t worrying about how they’ll pay for groceries or cover a bill, they’re free to contribute more meaningfully to the team.
Financial Stress and Employee Retention
Not only does financial strain affect performance, it also influences people’s decisions to stay or leave a company. In competitive labour markets, particularly in lower-income and frontline roles, a few extra dollars per week, or boasts of unwavering support, can be enough to push an employee to desire a new job.
In 2024, 9News stated that nearly 80% of Australian workers were considering changing jobs within the next year, primarily to increase their salaries and alleviate cost-of-living pressures. This shows that financial instability increases job-seeking behaviour and undermines trust in the employer-employee relationship.
As well as the genuine responsibility to care for your staff, staff turnover is expensive. The Australian HR Institute estimates the average cost to replace an employee is equivalent to 1.5 times their annual salary, taking into account recruitment, training, lost productivity, and cultural disruption.
So, as employers who actively invest in financial wellness see stronger employee retention, these programs are no longer just “nice-to-have”, they’re strategic tools for workplace optimisation.
The Role of Financial Wellness Programs
Financial wellness programs are designed to help employees better manage their money, which reduces financial stress and workplace disruption. While these programs take many forms, from workshops and online budgeting tools to debt counselling, one of the most impactful developments is earned wage access (EWA).
What is earned wage access? Earned wage access allows employees to access a portion of their already-earned wages before their regular payday. Rather than waiting for a fixed pay cycle, workers can withdraw a portion of what they’ve already worked for, giving them flexibility and financial control.
Unlike payday loans or credit cards, EWA doesn’t involve debt, interest, or long approval processes. It simply provides access to wages that someone has already earned, eradicating the traditional fortnightly or monthly pay day.
International studies show that EWA can reduce financial stress, lower absenteeism, and increase job satisfaction. While Australian-specific data is still emerging, early adopters are seeing positive results in both engagement.
Implementing a Financial Wellness Strategy
For employers looking to improve both productivity and retention, investing in financial wellness could be your best move. Here’s how to get started:
Start with understand your workforce & their needs
Use anonymous surveys focus groups to assess financial stress levels and identify key challenges.
Then, educate and inspire
Provide access to free or subsidised financial literacy resources. Topics might include budgeting, debt management, superannuation, or navigating cost-of-living pressures.
You should consider flexible financial tools
Explore flexible financial tools like earned wage access, that offer real-time support without increasing your payroll costs. Partner with reputable providers who offer secure, compliant, and user-friendly platforms.
Lastly, always normalise the conversation
Financial stress is often stigmatised. Make it clear that your organisation supports financial wellbeing, just as it does physical and mental health. Encourage managers to flag signs of strain early and point employees to relevant resources.
Be sure to get feedback and improve!
Track the impact of financial wellness with employee engagement surveys, retention metrics, and productivity indicators. Aim to always improve.
Blog in Summary
Financial wellness is a strategic priority for any organisation that values high performance, low turnover, and a positive workplace culture. With cost-of-living pressures rising, Australian employers have an opportunity to support their workforce members in more meaningful ways.
Whether through education, flexibility, or earned wage access, businesses that invest in their employees’ financial wellbeing are rewarded with higher retention, productivity, and a more engaged workforce.
