How the hidden cost of not living hurts productivity

A cancelled dinner booking. An unused week of annual leave. A gym membership put on hold. None of these may look like a workplace problem. Taken together, across thousands of Australian households, they are becoming one.

New research from Reward Gateway | Edenred, The Cost of Not Living Report, based on a survey of 1,500 employees across Australia and New Zealand, argues that the real story of the cost-of-living crisis in 2026 is not just what people are spending, it's what they have stopped doing altogether. Eight in ten employees surveyed say they have cut back on spending in the past 12 months because of rising costs, and dining out, travel, entertainment and clothing were among the first things to go. When people stop taking leave, seeing friends and enjoying small treats, the toll shows up not just at home but on the job.

For HR leaders already juggling constrained pay budgets, that finding deserves attention. The research suggests financial stress is no longer a private matter that stays outside the office door. It is walking in with employees every morning, and it is affecting how they perform once they get there.

Kylie Terrell, director of consultancy at Reward Gateway | Edenred APAC, said the problem starts with how the crisis’s impact is measured.

"For the past few years, we've measured the cost-of-living crisis in dollars, but the real cost is what people have quietly stopped doing. When people stop taking holidays, catching up with friends, or enjoying life's small moments, that inevitably affects how they feel when they come to work," Terrell said.

When cutting back starts impacting productivity

Sixty-one per cent of Australian employees say financial stress has affected their productivity at work. Sleep is one of the clearest casualties, with 45% of Australian employees reporting that money worries have disrupted their sleep enough to affect their work the next day. More than a third struggle to focus, and roughly a quarter report increased sick days, procrastination or conflict with colleagues.

Decision makers are noticing too. Half of HR and business leaders surveyed say low employee engagement is causing underperformance, and four in ten link it directly to falling productivity. Yet there is a gap in perception worth flagging for any HR team benchmarking its own culture: while a quarter of employees say they feel less engaged than a year ago, 46% of decision makers believe engagement has actually improved.

The macroeconomic backdrop explains why the pressure is building. Nominal wages in Australia rose 3.4% in 2025, almost exactly matching inflation and leaving real wage growth near zero, at a time when almost seven in ten decision makers already say meeting salary expectations is difficult. KPMG urban economist Terry Rawnsley, cited in the report, said the pattern was consistent across age groups.

"The data really shows some clear lifecycle trends, as priorities change, but unsurprisingly housing and food-related costs are the common theme across the age groups, with Australians increasingly being forced to rein in non-essential spending as cost-of-living pressures continue to hit hard," Rawnsley said.

What employees actually want from their employer

If the problem is financial stress, the fix employees are asking for is practical, everyday relief that delivers tangible value.

Around eight in ten respondents said discounts on groceries and fuel would be helpful, and roughly seven in ten wanted the same for utilities, insurance, health costs and phone and internet plans. Half of all respondents said discounts on essentials such as groceries, fuel and utilities would do the most to ease their financial stress. Two in three said they would be more likely to stay with their current employer if discounts were offered, and nearly three in four employees said cost-of-living support was an important factor when weighing up a new job offer.

Despite that demand, more than four in ten employees say they receive no financial wellbeing support from their employer at all. Terrell said that gap represented an opportunity rather than just a shortfall.

"The encouraging news is that employers don't have to solve inflation to make a meaningful difference. Practical support that helps employees reduce everyday costs, whether that's groceries, fuel, and utilities or rewards that give people more flexibility, can have a real impact on financial wellbeing, engagement and retention,” Terrell said.

A fuel benefit in practice

One example the report points to is Anglicare, which introduced a Fuel Expense Support Program after recognising how many of its frontline and mobile staff were absorbing rising petrol prices simply to get to work or between client visits. Kathryne Purvis, senior organisational development manager at Anglicare, cited in the report, said the program was designed to ease a pressure staff were feeling every day.

"For Anglicare employees, the Fuel Support Program offers practical relief from the financial pressures of essential travel, making them feel seen, valued, and supported, especially during these challenging economic times," Purvis said.

The pattern holds beyond one organisation. Reward Gateway | Edenred’s own data found fuel e-gift card sales grew 108% year over year in March, with users saving around 12 cents a litre, evidence that when a benefit lands somewhere people spend money every single week, it gets used. Terrell points to relief like this, rather than trying to solve inflation itself, as the kind of support that employers can realistically offer.

Seven practical moves for HR teams

The report sets out a series of tactics HR leaders can put in place without waiting on a bigger pay round:

• Treat cost-of-living stress as a genuine psychosocial hazard under workplace health and safety duties, since financial strain drives anxiety, fatigue and withdrawal in the same way other recognised hazards do.
• Equip managers with simple scripts and clear boundaries for money conversations, so staff are referred to the right support (EAP, payroll, hardship policies or roster adjustments) without a manager overstepping into financial advice.
• Make the full Total Rewards package visible and easy to use, since employees under pressure tend to fixate on base pay and overlook benefits that are already reducing their day-to-day costs.
• Launch an employee discounts and cashback platform that covers essentials such as groceries, fuel and utilities alongside everyday treats, so people can keep living rather than just cutting back.
• Introduce flexible, spend-anywhere rewards that employees can redeem on whatever matters most to them, from groceries to bills to a small moment of joy.
• Watch for early indicators of financial strain, such as rising absenteeism, unused leave or a jump in overtime, and agree on a response playbook before something spikes.
• Build fast feedback loops, such as short monthly pulse surveys with visible "you said, we did" updates, so support is targeted at what employees actually need.

Underpinning all of it is a simple shift in thinking, rather than HR departments tilting at inflation windmills. It requires treating everyday costs as an employee experience issue rather than a personal one. Employees who feel supported with everyday costs are more likely to stay, more able to focus, and more likely to bring their full energy back to the job.

Read the full report, The Cost of Not Living Report, here to explore the complete findings and guidance for helping employees keep living, not just cutting back.

This article was produced in partnership with Reward Gateway | Edenred