Post-pandemic financial security: a way forward
However, research undertaken by the ANZ Tony Nicholson Fellowship of the Confrérie de Saint-Laurent under the Financial life in uncertain times A study suggests that the recovery for low-income people will be slow.
“Precarious work makes it more difficult to prepare for a crisis, with low and irregular incomes making it impossible to build up a reserve of savings to protect against shocks”.
The report, loss of traction, brings together key findings from the study to highlight key policy lessons for creating a more just society post-COVID. The research analyzed data from ANZ Roy Morgan on financial wellbeing from the pre-COVID period (April 2018 to March 2020), up to the COVID peak of 2020 (April 2020 to September 2020) and the initial recovery (October 2020 to March 2021), exploring the impacts of the COVID crisis on vulnerable groups.
Pay the long term costs
High rates of precarious work among low-income workers have exposed this group to the worst of the COVID crisis.
Precarious work makes individuals vulnerable to changing demands during a crisis. More than half (52%) of workers in the bottom 20% of households by income reported losing their job, work hours or income due to COVID-related issues between April 2020 and March 2021. In contrast , only 28% of household paid workers (60% of the wealthiest workers) reported negative labor impacts.
ANZ Roy Morgan’s “meeting commitments” scores for workers in the lowest 20% of households by income were still 19% below the pre-COVID average (two years to March 20202) at when the peak of the 2020 crisis had passed (October 2020 to March 2021).
Precarious work also makes it more difficult to prepare for a crisis, with low and irregular incomes making it impossible to build up a reserve of savings to protect against shocks. This can lead to long-term financial scars as people are forced to go into debt or dip into their assets to make ends meet.
After the peak of the crisis in 2020, the percentage of male workers in the poorest 20% of households by income with loans or credit card debt increased by 18 percentage points to 58%. Women in the same group showed a 5 percentage point increase to 48 percent with debt and a net drop in those with a pension of 7 percentage points.
Many low-income workers entered the 2021 shutdowns already struggling with reduced debt and assets.
More limited financial support offered in the third wave likely compounded these challenges and made it harder for these workers to rebuild their financial well-being.
Resist the downward spiral – for people with precarious financial well-being, building economic security is an uphill battle with many risks