'Effective unemployment' is as high as a year ago, but households not getting same support

© Provided by ABC Business Government income support is not the same in these lockdowns, but some households are still saving a lot (ABC News: John Gunn)

Australia’s effective unemployment rate has risen to levels last seen a year ago, but far fewer people are receiving emergency support payments during these lockdowns.

It means areas currently under lockdown are more divided than they were last year, even as household savings surge nationally.

Peter Davidson, principal advisor at the Australian Council of Social Service (ACOSS), said disaster payments need to be extended to far more low income households in lockdown areas.

He said, after comparing the coverage of COVID payments in the current lockdowns to the lockdowns last year, the difference in government support is stark.

“We are no longer ‘in this together’,” he concluded.

‘Effective’ unemployment rate similar, emergency payments are not

In October last year, a time when lockdowns had long been relaxed in most states, except Victoria, and employment was recovering from the recession, the effective unemployment rate was 9 per cent.

According to Treasury figures, that “effective unemployment rate” included 950,000 officially unemployed people, and 210,000 people who were employed but working zero hours.

At that point in the economic recovery, 26 per cent of the labour force was still receiving COVID income payments.

A JobKeeper payment of $375 to $600 a week (which had been higher in the first phase of the lockdowns), was being paid to over 1.5 million workers.

And a coronavirus supplement of $125 per week (which had been higher) was being paid to everyone on the lowest income support payments (including JobSeeker, Youth Allowance and the Parenting Payment) whether or not they were directly affected by the lockdowns, which covered more than 2 million people.

Mr Davidson said things were very different in the current lockdowns.

He said the most recent unemployment figures, collected in August, showed the effective unemployment rate was 8 per cent last month (calculated using the same measure used by Treasury officials last year). 

The composition of the current “effective unemployment rate” included 639,000 officially unemployed people, 316,000 people who were employed but working zero hours, and 177,000 people who had left the labour force since the recent lockdowns began.

But just 11 per cent of the labour force, and 9 per cent of people on the lowest payments in locked down areas, were receiving COVID income supports last month.

The new COVID Disaster Payment of $450 to $750 per week was paid directly to some workers who had lost hours due to the recent lockdowns.

And a $200 per week disaster payment was paid to some people receiving an income support payment (like JobSeeker) who had lost paid work because of the lockdowns.

Mr Davidson said just over 1.5 million people received one of those payments.

But in locked down areas during August, just 89,000 people out of a total 942,000 people on the lowest income support payments received the $200 per week payment.

“So, while those who haven’t lost paid working hours are building up their savings, many people on the lowest incomes under lockdown face severe financial hardship,” he argued.

“Half the nation is locked down, and in those places we are more divided that we were last year.”

Mr Davidson said since it is harder for so many households in areas that are locked down to access emergency payments, it is contributing to an unequal amount of saving in the economy.

Huge amount of savings in system

And there is huge amount of saving occurring at the moment.

Last week, Commonwealth Bank economist Gareth Aird said CBA’s internal data indicated that government payments via the “COVID Disaster Payment” to households in lockdown states were having a massive impact on the level of national savings.

He said the level of emergency government payments in NSW and Victoria in recent months had been significantly bigger than the drop in wages and salaries in those states during lockdowns, and net result had seen household income surge.

Not only that, but the boost in income from government payments, coupled with lower spending because of the lockdowns, had generated an “unprecedented” accumulation of savings in the economy.

However, his data was only aggregate data, meaning it referred to the level of savings in the country as a whole.

It did not break down the different saving rates for different types of households.

“We now estimate that the accumulated savings will total $230 billion, or 11.5 per cent of gross domestic product,” Mr Aird said.

“The household income surge, which has generated an almighty war-chest of savings, is an upside risk to consumption and inflation over the next two years.

“Overall data indicates that there is a heap of cash that can be deployed to support consumer spending on reopening.

Less than 20 pc of those on lowest incomes qualified for disaster payments

However, Mr Davidson said demand for emergency relief had risen dramatically in the current lockdowns, despite the surge in national savings.

Last week ACOSS released a report, “Locked out in lockdown“, which looked at the level and coverage of emergency government payments this month.

It said many people on the lowest incomes had reached breaking point.

“People receiving income support payments like JobSeeker, Youth Allowance and Parenting Payment continue to be excluded from COVID Disaster Payments if they haven’t lost paid work (or didn’t have paid work to lose) as a result of the lockdowns,” the report noted.

“Most receive JobSeeker Payment, which is just $44 a day, and are trapped in poverty because they cannot get paid work.”

The report showed that, as at September 12, just 152,000 people receiving income support payments had been granted the $200 per week COVID Disaster Payment.

It said this represented approximately 16 per cent of people receiving working-age payments in locked down areas.

“In other words, approximately 800,000 people (84 per cent) on the lowest incomes do not qualify for any disaster support at all despite being unable to get paid work because of the lockdowns,” the report concluded.

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