With consumer confidence suffering its sharpest decline since the pandemic and job loss anxiety hitting a five-year high, leadership is no longer just about management – it’s about stability. Here is how HR can navigate the cost of living shock and support a workforce bracing for the worst.

Key information:

• Australian consumer sentiment has plunged 12.5 per cent in April to a read of 80.1, from 91.6 in March – the sharpest drop since the pandemic 
• Fear of job losses have hit a 5 ½ year high, with a 9.7 per cent jump to 147.8 in the Unemployment Expectations Index. Anxiety is the highest in construction and hospitality.  
• Near-term sentiment is the most concerning. 

The fuel crisis, the war and interest rate hike fears have tanked consumer confidence. The April Westpac-Melbourne Institute Consumer Sentiment Index has captured the collective consumer state of mind – making it the most challenging time for the national workforce since the pandemic. 

The average pump price hit $2.40/litre in April, representing the largest percentage increase in the history of the index. A 25bp rate hike and fears of more to follow have households bracing for the worst. 

While some mainstream headlines propagate panic, there are strategies and solutions behind the stats for HR leaders. It tells a story about the people (and the rationales) behind the data points. 

This isn’t just dampening buyer attitudes; it’s triggering job loss anxiety akin to COVID-19. 

Fear at a five-year high 

There was a 9.7 per cent jump to 147.8 in the Unemployment Expectations Index, which is the worst read on job expectations since the 163 recorded in August 2020 – right before the government stepped in with JobKeeper. 

Besa Deda, Chief Economist at William Buck and upcoming AHRI National Convention and Exhibition speaker says, at this stage, it looks like a drop in sentiment and an early warning signal rather than evidence that layoffs have begun – a sentiment backed up by AHRI’s recent Quarterly Work Outlook report, which found that redundancy intentions have eased to 19 per cent, the lowest level recorded in the report’s time series.

Unemployment is holding steady at 4.3 per cent, although this is expected to edge higher over the remainder of the year, she says.

Deda highlights that employers’ recent experience of acute labour shortages in the period following COVID-19 is still fresh, which may make firms reluctant to shed employees prematurely. 

“When sentiment shifts towards pessimism and fear, the most effective response from HR leaders is to communicate more frequently and clearly,” she says. 

“Periods of heightened uncertainty increase the risk that employees fill information gaps with worst-case assumptions. This can undermine morale, engagement and productivity, even when jobs are still secure. Clear, consistent messaging about workforce plans, expectations and priorities helps stabilise teams and maintain trust.” 

Viet Nguyen, a Senior Research Fellow in the Melbourne Institute of Applied Economic and Social Research, advises leaders to calm employees and continue with business-as-usual. 

Besa Deda, upcoming AHRI National Convention and Exhbition speaker

Nguyen believes this is an opportunity for management to accommodate their people with flexible arrangements and fuel subsidies, which in turn can increase company loyalty. 

“If you can help employees get through these periods, you not only build morale and loyalty, but you also build up the image of your company,” he says. 

This is especially important for HR leaders in sectors with the sharpest sentiment crash: construction and recreation. Job loss fears in construction rose 22 per cent and hospitality saw a 19 per cent increase. Construction is facing an energy supply shortage, similar to the building supply shortage of 2022, as it demands diesel to move materials. 

Regional areas also saw a sharp fall of 16 per cent due to the dependence on fuel for transport. 

This is the time for leaders to organise business activities so that they can accommodate employees, especially in these sectors and regional areas.

Flexible hours, temporary workload adjustments or travel subsidies could well be more valuable retention tools than a standard annual raise (which may not be viable for many businesses this year anyway).

“When sentiment shifts towards pessimism and fear, the most effective response from HR leaders is to communicate more frequently and clearly.” Besa Deda, Chief Economist, William Buck

How can HR practitioners help?

Fear is growing while income is plateauing. According to the Index, we are heading into another period of declining real per capita income. 

There’s been a decline in labour mobility, so employees are moving jobs less often, forgoing sizable pay raises for security. Nguyen says this is magnifying fears further. 

This doesn’t just impact how people spend, but how productive and present they are. Financial stress is a workplace issue that impacts wellbeing and performance. It’s not often disclosed, due to fear of the impact on their role. 

Deda suggests HR could focus on manager capability, visible leadership reassurance and financial wellbeing tools, with early intervention and practical support measures. 

“Financial stress typically shows up before job losses, not after them. Confidence, behaviour and wellbeing deteriorate first, while indicators like unemployment tend to move later,” she says. 

Early indicators of financial stress include subtle behavioural changes, lower productivity, reduced concentration, absenteeism and presenteeism. 

Maider Birett, Chief People Officer at William Buck NSW & ACT, says employers could consider reducing these employee stressors by “ensuring workloads, expectations and change in the organisation is monitored and adjusted where necessary”.

“Confidence, behaviour and wellbeing deteriorate first, while indicators like unemployment tend to move later.” – Besa Deda

This means clear communication of available support, reaffirming it regularly and in a tone that emphases care, empathy and understanding, she adds.

“As leaders sit at the frontline of disclosure, they must be equipped to respond to deeply personal and sensitive conversations,” says Birett. “Training should focus on how to listen and respond without judgement rather than attempting to resolve the financial issue.” 

Regular check-ins, reasonable workloads, meeting employees where they are and sensing when external expert support is required are all ways HR practitioners can carry their people through unpredictably tough times. 

The Westpac-Melbourne Institute Consumer Sentiment Index could be the first hint for HR that their people might not be okay. At the very least, it serves as a timely conversation opener to check-in with teams, together for camaraderie and one-on-one for confidentiality. 

With the Index published monthly, it can be integrated into your existing workplace support measures as a consistent benchmark to gauge how your employees are coping with the ongoing financial pressures likely to persist in the coming months.

Amanda Smith is a freelance journalist who reports on culture, technology, and women’s health. She has written for titles such as The Guardian, MIT Technology Review, Business Insider, and National Geographic.  She’s a regular contributor to Sydney Morning Herald, where she covers IVF, identity, and careers. Amanda is an Australian living between New York City and Adelaide.