A recession and a pandemic: young Australians are facing an uncertain financial future

by Clare Roche and Claire Sams

Zoe, a full time student and a part time worker at Timezone Bowling, is grateful for the impact JobKeeper has had.

More than some extra spending money, it’s left her feeling financially secure in uncertain times.

While she’s full of praise for how JobKeeper has helped keep her head above water, Zoe is worried about the financial future she’ll be facing in the long-term–and a future that isn’t always made clear to her.

So, what is actually going on?

Enough economic terms and predictions have been tossed around in recent weeks that it’s understandable if they’re starting to blur together, even as COVID’s economic impact on young Australians is rapidly becoming clearer.

Earlier this week, Australia officially entered in a recession, with the economy contracting by 0.3% in the March quarter and 7% in the June quarter.

As a general rule, a recession is when the economy “goes backwards for two consecutive quarters,” according to Junkee.

This 7% statistic has tipped Australia into the deepest recession since the Great Depression, and is the biggest collapse since the Bureau of Statistics began keeping records in 1959.

Treasurer Josh Frydenburg recently confirmed that Australia has officially entered into a recession for the first time in decades, after months of poor economic performance due to the pandemic (source: SBSNews/Twitter)

Additionally, the first stage of the JobKeeper and JobSeeker payments ends in late September, with Parliament’s new legislation allowing the payments to continue, albeit changed.

The second stage of JobKeeper will see it drop from $1,500 a fortnight to $1,200 from 28th September and then to $1,000 from 4th January to 28th March 2021.

For Australians who worked less than 20 hours a fortnight, the $1,500 rate will fall to $750 and then $650 over the same period.

Meanwhile, the JobSeeker payment will be unchanged until 25th September, when it will be reduced to $250 until the end of 2020.

The so–called ‘liquid assets test’ is also being re–introduced, where any “funds readily available to you or your partner” are included in evaluating your eligibility for JobSeeker.

What is the impact going to be?

While some have praised the federal government for the JobKeeper and JobSeeker payments, other young Australians feel they have been left behind as the economic forecast worsens.

Zoe feels it’s the Australians who can least afford these changes that will likely be made to bear the brunt of them, while those in a more financially secure position will see little to no change.

Moving beyond the changes to the JobKeeper and JobSeeker payment, it is important to note that while this economic crisis will affect all Australians, young Australians will be facing a particular set of challenges.

Professor Janeen Baxter told the ABC that going into the future, the COVID-triggered economic downturn may stop young Australians from achieving life stages, such as buying a house.

“If they come from advantaged situations, this will just be a delay in those stages, but for other young people, it might not just be a delay, it may put them off track completely,” Professor Janeen Baxter told the ABC.

Cover image is by Jp Valery/Unsplash.