Youth feel the pinch after burning through savings buffer
Young people are most at risk of financial stress post-coronavirus after being forced to raid their savings and take on debt to stay afloat during the pandemic, according to a report.
Many young Australians have exhausted their savings buffer during COVID. Photo: ABC
The Consumer Policy Research Centre has commissioned six-monthly surveys to track consumer confidence and spending as Australia slowly emerges from the crisis.
It warned in the coming months, the gap between people who received and those who missed out on support during the pandemic will widen.
Conducted by Roy Morgan in May, the first survey highlighted the vulnerability of young people aged between 18 and 35.
It found they were more likely to be concerned than other age groups about their ability to pay for household expenses, including groceries and energy bills.
Affording rent, which caused financial stress among the highest number of Australians, worried young people slightly more with 41 per cent concerned compared with 37 per cent on average.
The CPRC report pointed to the number of young people borrowing money from family or going into debt to keep afloat during the crisis.
About 34 per cent said they had accessed their savings, with eight per cent also drawing down their limited superannuation.
It has reduced their buffer against any further, unexpected financial or personal emergencies.
In prior times of economic strife, stimulus measures have helped keep people spending and money flowing through the economy, the report said.
But the coronavirus restrictions on people’s spending and movement meant jobs were lost much faster, especially among the hospitality, tourism and entertainment sectors.
Disproportionately staffed by women and young people, they were also the industry’s hardest hit by the coronavirus.
Between mid-March and early May 2020, jobs worked by people aged 20 years and under fell by 14.6 per cent, the biggest rate of job loss among all age groups.
“During economic downturns [young people] are at risk of the ‘last in, first out’ response, and employers are more reluctant to hire or retain less experienced staff during periods of economic weakness,” CPRC’s report said.
It cautioned the Federal Government against ending its subsidies too soon or risk another tumble in consumer spending at the end of 2020 when they cut off.
The resulting financial stress could cause consumer spending and confidence to fall further, stalling economic recovery into the new year.
-AAP
