Six Million Workers Struggling as Wages Fall Behind Cost of Living

• Nearly half (45%) of Australian employees feel their income is insufficient, with one in eight (12%) stating they are nowhere near meeting their financial needs
• Just one in three (33%) feel the economy is in a secure position, down from 53% last quarter
• Burnout is up 48% compared to the previous quarter, now affecting 43% of employees
• 43% are concerned about their role being made redundant, compared to 28% last quarter

7 May 2025 – New research from ELMO Software reveals 45% of Australian employees – equating to close to six million workers (5.76 million) – say their salaries aren’t keeping pace with the cost of living, as concerns about economic security and burnout continue to grow.

The latest ELMO Employee Sentiment Index (ESI), covering January to March 2025, surveyed over 1,000 Australian employees to gauge workforce sentiment around job security, wellbeing, and broader economic pressures.

The findings paint a stark picture of financial stress and declining workplace wellbeing. One in eight employees (12%) say they are “nowhere near” earning enough to meet their family’s financial needs. While 55% say they earn enough, 42% of them admit they are only just scraping by.

Security slips as stress surges

Economic security is faltering. Just one in three employees (33%) feel the economy is in a secure position, down from 53% last quarter. Meanwhile, the number of workers worried about redundancy has surged from 28% to 43%, with almost half (48%) feeling they need to work harder or put in longer hours to keep their job safe (up from 37%) – a clear sign of anxiety amid broader economic uncertainty.

Burnout is up 48% from the previous quarter, now affecting 43% of employees. More workers are skipping annual leave (down to 29% from 33%), and more are showing signs of presenteeism – 36% say they’ve worked while unwell in the past three months, up from 28%. Use of Employee Assistance Programs has also doubled to 6%.

“Job insecurity is rising – not necessarily because of what’s happening inside organisations, but because of the uncertainty people are feeling more broadly,” said Joseph Lyons, CEO of ELMO Software. “When employees feel financially stretched, it often shows up in their wellbeing, their energy, and ultimately their performance at work. It’s a challenge people leaders can’t afford to ignore.”

Despite these challenges, 12% have received a promotion and 27% have taken on additional responsibilities, indicating that career movement is still happening even in a tough economic climate.

Wage expectations lag behind reality

While seven in ten workers expect a pay rise this year, the average anticipated increase is just 4% – which many say simply isn’t keeping pace with the cost of living. Among those not expecting a raise, common reasons include not planning to ask (35%), company financial constraints (21%), or external economic conditions (21%).

There’s also a growing gap between what employees believe should influence pay and what they believe their employers actually value. One in three employees (34%) say individual performance should drive pay decisions, but only 22% believe their employer prioritises this. Instead, many think profitability (27%) is the main factor guiding pay reviews.

According to ELMO’s HR Industry Benchmark Report, the most common approach to employee remuneration in Australia is a combination of individual performance and market rates (31%) – but perceptions still differ.

“This research highlights a growing disconnect between employee expectations and the realities of pay,” said Joseph Lyons, CEO of ELMO Software. “That disconnect between effort and reward can have real implications for engagement, retention, and productivity.”

“In uncertain times, workforce data becomes even more critical,” Lyons added. “Leaders who understand how their people are feeling – and why – are the ones best equipped to respond with empathy and impact.”

What’s valued most beyond pay

When asked what they value most beyond pay, employees ranked flexible work arrangements highest (60%), followed by performance bonuses (56%), increased super contributions (50%), professional development opportunities (44%), health insurance (42%), and more leave (37%).

“Short-term economic pressures are real, but they shouldn’t come at the cost of long-term strategy,” said Lyons. “Organisations that invest in flexibility, development, and fair pay now will be better positioned to retain talent and grow sustainably.”

Flexibility is front of mind, but what that looks like in practice is changing.  ELMO’s Benchmark Report shows 66% of Australian HR professionals anticipate policy shifts – nearly half (49%) toward more hybrid models. Meanwhile, only 14% intend to mandate full-time office presence.

Source: Australian Bureau of Statistics

​As of August 2024, the Australian Bureau of Statistics (ABS) reported approximately 13.9 million employed persons in Australia. Of these, about 1.1 million were independent contractors, representing 7.5% of all employed individuals (Source).

To estimate the number of employees aged 18–64, excluding self-employed individuals:​

• Total employed persons: 13.9 million
• Independent contractors: 1.1 million
• Employees (excluding self-employed): 13.9 million – 1.1 million = 12.8 million
• 45% of employees feel their income is insufficient – 45% of 12.8 million is 5.76 million

About ELMO Software 

Founded in 2002, the ELMO Group comprises ELMO Software in Australia, New Zealand and the UK, and Breathe HR in the UK. It is the trusted provider of HR technology solutions to 16,000+ small and mid-sized organisations and two million end users.

With a comprehensive suite of ISO-certified solutions that span the full employee lifecycle, ELMO Software is designed to scale as organisations grow. Flexible and configurable, ELMO’s one-stop HRIS fits to your specific needs and workflows.

Through powerful technology, automation, data and analytics, ELMO Software empowers HR professionals to play an integral role in company decision making.

For more information, please visit www.elmosoftware.com.au  or follow ELMO Software on LinkedIn.

About the ELMO Employee Sentiment Index

The ELMO Employee Sentiment Index offers a quarterly pulse check on the actions, attitudes and behaviours of Australia’s employees. It tracks changes in perceptions around job security, wellbeing and the economy, as well as topical issues impacting Australian employees.

The research was commissioned by ELMO Software and conducted by YouGov. 1,017 Australian employees were surveyed online, aged 18-64 (excluding self-employed employees) between 1 and 3 April 2025. Respondents were asked to reflect on the three-month period between January 2025 to March 2025.

Respondents were members of a permission-based panel, geographically dispersed throughout Australia including both capital city and non-capital city areas. After surveying, the data was weighted to the latest population estimates sourced from the Australian Bureau of Statistics.