Losing traction: lessons in financial wellbeing from the COVID crisis

Economic depressions Welfare recipients Economic insecurity Financial security Household finance Australia

As Australia reopens, it is easy to feel that the worst of the COVID-19 crisis is over. However, this analysis suggests recovery for many will be slow, with ongoing struggles making ends meet. For some the financial impacts from COVID will last a lifetime. At the same time, the potential for new COVID strains remains and risks from global instability and climate change are accelerating. In this context, the authors outline vital lessons from the COVID crisis to enable economic security for all in uncertain times.

Key points:

The growth of insecure employment and an inadequate social safety net have reduced public protection from shocks while making it harder for many individuals to save. This meant more people on low incomes entered the pandemic with financial wellbeing well below the Australian average, leaving them vulnerable. The analysis shows:

  • Income support recipients got a brief reprieve from poverty: Increased government support through the crisis allowed income support recipients to meet everyday commitments.
  • Unemployed workers on the JobSeeker Payment reported a 10% improvement in meeting commitments in the 2020 COVID peak. Financial stress returned for this group as government support was wound back, with Meeting Commitments scores falling by 19% and their Resilience scores declining by 14%.
  • Single parents not in employment entered the crisis with Meeting Commitments scores 43% below the Australian average. With the increased government support, scores rose by a modest 2%, before falling by 16% as the Coronavirus Supplement was gradually removed.

The research findings highlight the additional risks faced by those on low incomes. Protecting people from shocks and stopping the downward spiral of financial stress requires a decent social safety net, access to quality employment that allows people to build their own resilience and a robust social infrastructure base that delivers dignity and opportunity.


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