However, research undertaken by the Brotherhood of St Laurence’s ANZ Tony Nicholson fellowship as part of the Financial Lives in Uncertain Times study suggests recovery for people on low incomes will be slow.

“Insecure work makes it harder to prepare for a crisis, with low and irregular incomes making it impossible to build a savings buffer to protect against shocks.”

The report, Losing Traction, brings together key findings across the study to highlight the key policy lessons for creating a fairer society post-COVID. The research analysed ANZ Roy Morgan Financial Wellbeing data from the pre-COVID period (April 2018 to March 2020), through the 2020 COVID peak (April 2020 to September 2020) and initial recovery (October 2020 to March 2021), exploring the impacts of the COVID crisis on vulnerable groups.

Bearing the brunt long-term

High rates of insecure work among low-income workers left this group exposed to the worst of the COVID crisis.

Insecure work leaves individuals vulnerable to shifting demand during a crisis. More than half (52 per cent) of workers in the bottom 20 per cent of households by income reported losing employment, work hours or income due to COVID-related issues between April 2020 and March 2021. By contrast, just 28 per cent of higher income workers (top 60 per cent of workers) reported negative work impacts.

ANZ Roy Morgan “meeting commitments” scores for workers in the lowest 20 per cent of households by income were still 19 per cent below the pre-COVID (two years to March 20202) average by the time the peak of the 2020 crisis had passed (October 2020 to March 2021).

Insecure work also makes it harder to prepare for a crisis, with low and irregular incomes making it impossible to build a savings buffer to protect against shocks. This can result in long-term financial scars as people are forced to take on debt or draw down assets to make ends meet.

Following the 2020 peak of the crisis, the percentage of male workers in the bottom 20 per cent of households by income with loans or credit card debt increased by 18 percentage points to 58 per cent. Women in the same group showed a 5 percentage point increase to 48 per cent with debt and a net decline in those with any superannuation by 7 percentage points.

Many low-income workers entered the 2021 lockdowns already saddled with debt and diminished assets.

More limited financial support offered in the third wave is likely to have compounded these challenges and made it harder for these workers to rebuild their financial wellbeing.

Resisting the downward spiral – for people with poor financial wellbeing, building economic security is an uphill battle with many risks