Aviva Family Finances Report December 2016

Widespread worry about job security and pay cuts

Aviva Ireland’s first Family Finances Report finds only 19% say economic recovery has benefitted them personally

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Monday 12th Dec:

The long-term impact of the recession on the Irish population is evident in new research from Aviva which shows that nearly half of the workforce is worried about job security and many fear their pay may be cut. The first edition of Aviva Ireland’s new Family Finances Report, which was carried out by RED C, provides a snapshot of the financial well-being of Irish households and gives an insight into the financial concerns of the Irish families.

Despite projections of continued growth in GDP and the sustained downward trend in the unemployment rate, the Aviva survey found considerable uncertainty and a lack of confidence about the economy among families.  In particular, confidence in job security was fragile:

  • 45% said they still worried about losing their jobs while 39% said they felt more secure about work.
  • On pay expectations, 40% expected a bonus or salary increase while the same percentage said they expected pay cuts.
  • Half of respondents said their work-life balance was worse now than a few years ago
  • and 55% reported feeling more stressed in their jobs than in the past.

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The survey of a representative sample of 1,280 adults was carried out in the second week of October against a backdrop of threatened public sector strike action in pursuit of pay restoration and increases.

Commenting on the Report, Ann O’Keeffe, Actuary at Aviva Life and Pensions, said:  “Given that unemployment has fallen steadily over the last four years and is now at it lowest level since late 2008, it is surprising that our survey found that more workers were worried about losing their jobs than felt secure in them.   It is also remarkable that respondents had such a pessimistic view of their job and pay prospects at a time when other workers were pointing to our economic recovery as justification for their pay demands.”

The uncertainty and insecurity emerging from the Report about attitudes to work is reflected in the findings about how families perceive the economic recovery. Even though headline macroeconomic indicators point to a strengthening recovery, there is considerable scepticism among households. The 55 to 64 year old age group emerged as the most unconvinced about the recovery:

  • Overall, 44% agreed that a recovery was underway with 18 to 24 year olds (57%) expressing the highest level of optimism. 
  • But asked if they had benefitted personally from the up turn, a majority (55%) disagreed while just 19% agreed.
  • Belief in the recovery was strongest in Dublin and Leinster and, by social demographic grouping, stronger among the more affluent ABC1s (23%) than among their counterparts in C2DEs category (16%).
  • Only 9% of 55 to 64 year olds said they were experiencing the recovery compared to 26% of 18 to 44 year olds.

The survey also confirmed recent data on increased household savings. Delving into the reasons for this increased propensity to save:

  • 58% agreed that fear about an uncertain future had made them more likely to save, with the younger age groups expressing the strongest level of agreement.
  • Nine out of ten had at least one form of savings or investment with most putting money aside every month
  • Excluding pensions, the survey found households were saving on average €4,800 per annum.
  • Over half said they were in control of their finances;
  • 78% said they would usually save rather than borrow for an expensive purchase;
  • Over half (54%) said they were already saving for events will into the future. 

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Taken together, these findings suggest one positive legacy of the boom and bust has been a more rational and precautionary approach by families to their personal finances. “Our Family Finances Report paints a picture of families taking more control of their finances and making prudent preparations to protect themselves from unexpected events in the future and Brexit, in particular, must have been on respondents’ minds. But it may be that in the aftermath of our crisis, there is a heightened awareness of the susceptibility of our economy to external economic shocks and families have decided to take measures to build their own buffers,” said Ms O’Keeffe. She added that the introduction of a specific module on personal finance at second level education would help empower families of the future to manage their financial positions more effectively for their own protection.

In the Report’s Spotlight section on home ownership, the survey found nine out of ten would prefer to own their own home rather than rent and 40% of those who do not currently own a home said they were planning to buy in the next five years.  From these findings, Aviva estimates that indicative demand for houses among first time buyers could be as high as 220,000 or up to 44,000 per annum for the next five years.

Only 20% of existing home owners said they planned to move house over the next five years with slightly more planning to trade up than want to downsize.  Given the Government’s target of 25,000 new home completions per annum by 2020, the housing problem looks set to endure well into the next decade.

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Aviva Family Finances Report (1,497Kb)

Notes for Editors:

  1. The research for Aviva Family Finances Report was conducted by RED C who interviewed a quota controlled, representative sample of 1,280 adults aged 18+ online between 7th and the 13th of October.
  2. Aviva Family Finances Report will track income, spending, borrowings, savings and investments of Irish families and provide insights into their economic and financial well being, their concerns and their priorities. It will be published twice a year. 
  • Aviva Ireland provides retirement income, life cover, protection, general insurance, and investment and savings products to almost 1million customers
  • We employ 1,060 across our three locations in Dublin, Galway and Cork.
  • We are one of Ireland’s largest insurers and part of Aviva Group, which has to 33 million customers, across 16 markets in Europe, Asia and Canada
  • Aviva’s asset management business, Aviva Investors, provides asset management services to both Aviva and external clients, and currently manages over £289 billion in assets.
  • Aviva helps people save for the future and manage the risks of everyday life; across the Group we paid out £30.7 billion in benefits and claims in 2015.
  • By serving our customers well, we are building a business which is strong and sustainable, which our people are proud to work for, and which makes a positive contribution to society.

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