From interest rates to inflation, employment to consumer spending, NAB Chief Economist Alan Oster shares where he sees Australia’s economy heading. Watch now.
Given the link between workplace satisfaction and productivity, and between consumption and wellbeing, creating a happy workplace should be a key focus for any business. We share some intriguing data to help businesses considering how to improve staff engagement and customer satisfaction.
Creating happy workplaces should be a key focus for businesses given the link between workplace satisfaction and productivity, and between consumption and wellbeing.
The latest NAB Quarterly Wellbeing Index and Consumer Anxiety Index includes some intriguing data for businesses considering how to improve staff engagement and customer satisfaction.
Understanding what makes Australians tick – particularly what makes them happy and improves their wellbeing – is an important consideration for businesses as well as individuals. “Understanding people should be at the heart of any business,” says Dean Pearson, Head of Industry Analysis at NAB.
The NAB Quarterly Wellbeing Index, along with the Consumer Anxiety Index, demonstrates just what state we’re all in. The Wellbeing Index is a broad, subjective measure of quality of life – not just economic output. The Consumer Anxiety Index is more focused on money – that is, people’s concerns about being able to meet their basic needs.
“As a business, NAB wanted to better understand its own clients, and to get as close to people as possible and to mirror back how they’re feeling. This helps the bank realise its customers’ business goals,” says Pearson.
The indices also represent an important tool for other businesses. They provide important insights into people’s behaviour, helping to explain their underlying emotional state and motives.
“It helps businesses get to know what people value and to find some rationale about why they’re acting the way they are,” says Pearson. “It’s then that they can better respond to them – whether they’re a consumer, employee or anyone for that matter. The real danger is expecting people or customers to behave a certain way because of the state of the economy. People don’t have to be ‘rational’, at least not in the way an economist might expect them to.”
Certainly the figures support this, with some interesting findings. They show that despite relative modest overall price growth in recent years, people are very concerned about the rising cost of living. And consumers are very clear about which costs most concern them. People aren’t particularly worried about the cost of their annual trip to Bali or a meal at their favourite restaurant, rather they’re worried about the things they don’t have control over – particularly utility bills, housing, transport and education costs, which have been rising quite quickly. Generally, consumers have cut back on their discretionary spending as “essentials” control more of the household budget. Australians are still spending, but they increasingly value services over goods.
“Our Consumer Anxiety Index reveals that the cost of living is still the biggest single cause of anxiety for Australians”, says Pearson.
The collated data provides important insights into the link between wellbeing, relationships and economics. The trick is to break down the information into quartiles, explains Pearson, rather than simply looking at aggregates.
Following this approach, the Wellbeing Index reveals those with the very highest levels of wellbeing are at the high-income end of the spectrum, while people with the lowest sense of wellbeing overwhelmingly fit within the under $35,000 income bracket.
Increasingly, most measures of wellbeing (excluding anxiety) appear to improve with income.
The index also shows those with the highest sense of wellbeing value personal relationships, their mental wellbeing, the environment and work-life balance above other considerations. For people with a very low sense of wellbeing, the critical issues that detract from their wellbeing are financial security, followed by mental wellbeing and physical health.
“Essentially, if you’re struggling and don’t have enough money, that’s the greatest reason for low wellbeing,” says Pearson. “All the wellbeing research tells us that, while money doesn’t buy happiness, money is important when you don’t have enough.”
The latest quarterly findings, published in September 2014, showed an improvement in Australians’ overall wellbeing (after a significant fall post the Federal Budget), but anxiety remains a key detractor. More than one in three people continue to rate their current level of anxiety as “very high”.
“With more than one-third experiencing high anxiety, that’s very broad-based,” says
Pearson. And the surveys show that the ability to finance retirement is one of the biggest causes of people’s anxiety.
“Even more concerning is that one in seven Australians still rate their life’s worth as ‘very low’.”
Widows and retirees retained their position as having the strongest levels of wellbeing and single people the lowest. Men and women report similar levels of wellbeing, but 50+ males have relatively stronger levels while young women (18-29) have weaker levels.
When the index first came out, Australia’s wellbeing score was lower than a comparative index in the UK, despite our 23 years of uninterrupted economic growth – an intriguing result which suggests a sense of wellbeing is not necessarily linked to the state of the economy, and rather an individual’s perception of their own personal circumstances.
NAB’s Wellbeing and Consumer Anxiety indices are in line with international developments. There’s an increasing tendency among international bodies to give consideration to human capital and environmental capital, says Pearson. This recognises that economics – essentially growth in GDP – and a range of other objective measures only tells so much.
“International bodies such as the Organisation for Economic Co-operation and Development (OECD) are no longer focusing solely on economic growth but rather how that growth is shared,” says Pearson. “They’re asking how people are feeling and how they perceive their own lives. The power of sentiment has a huge bearing on economic conditions. Poor sentiment can see investment decisions delayed or consumers putting off purchases.”
For business owners keen to assess the financial health of their business, talk to your NAB Business Banker or complete our free Financial Health Check at nab.com.au/businesstips. It’s a quick and easy way to identify and review potential issues in your business, and what you can do to fix them.
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