Poll sheds light on many households' dire situation, with debt as plan B when emergency benefits end
For nearly half of Canadians whose work situations have been impacted by the COVID-19 pandemic, the federal government’s various emergency aid measures have provided much-needed relief. But with no vaccine in sight and signs pointing to a long and bumpy economic recovery, it’s just a matter of time before households are consumed by their underlying financial problems.
Those are the headlines from new Ipsos poll findings announced by insolvency firm MNP.
The survey found that out of roughly 2,000 Canadian adults, 46% have had their work situation affected by the pandemic. That includes 17% who have taken pay cuts, 16% who have lost their job, and others who said someone in their household has been laid off (14%) or gotten their pay reduced (9%).
Younger Canadians aged 18 to 34 years were more likely to report a negative impact to their work situation, with 24% saying they’ve been let go and another 24% saying they’re working reduced hours or pay. Respondents aged 55 or older, meanwhile, were most likely to report no change to their work situation.
When asked what they plan to do when government-provided emergency benefits run out, 46% of those receiving aid said they will have to simply cut back any way they can. Nearly one third (32%) said they’ll apply for EI, while 30% said they’ll dip into their savings to pay bills.
“Those in need have certainly welcomed the federal government’s life raft of COVID-19 aid programs,” MNP President Grant Bazian said in a statement, noting the federal government’s recent decision to extend their aid programs. “However, … their underlying financial problems have not gone away.”
In the face of those problems, 35% of survey respondents said they intend to borrow more when COVID-linked government financial support ends. Seventeen per cent said they’ll use credit cards; 16% will turn to friends or family; 12% will use a line of credit; 7% plan to take a bank loan; and 4% are looking at payday loan services.
“Even if it is generally responsible borrowing and interest rates remain low, it’s easy to get deeper in debt without realizing how difficult it is to get out,” Bazian said, warning that Canadians who borrow to make ends meet will experience the shock of their lives when debts come due, deferred payments resume, and collection activity returns to normal levels.
MNP also warned of an expected spike in consumer insolvencies following the pandemic among many Canadians whose pocketbooks were already strained before the virus hit. That includes 7% of survey respondents who said they plan to file a consumer proposal, and 6% planning to declare bankruptcy when government support ends.
