Average household incomes in Australia defied the global financial crisis to increase substantially in the 2008-09 financial year, and life satisfaction levels were unaffected by the downturn, according to data from a nine-year longitudinal study.
The Federal Government’s fiscal stimulus polices, in late 2008 and early 2009, ameliorated the effects of the crisis and caused median household income to rise by $2,802, data from the seventh Household, Income and Labour Dynamics in Australia (HILDA) survey shows.
The survey, produced by the Melbourne Institute of Applied Economic and Social Research at the University of Melbourne, shows that lone-parent families were the biggest beneficiaries of the polices, averaging $2,681 in equivalised payments.
Between 2002-03 and 2008-09, mean household annual disposable income increased by $17,200, or $2,866 per year, the survey showed. Satisfaction with life in Australia remained stable over the nine-year period, even throughout the financial crisis, and was highest among older people and teenagers.
“Initially I was a bit surprised at the size of the increase of incomes [in 2008-09],” said Roger Wilkins, Principal Research Fellow at the Melbourne Institute and lead author of the report. “But when I went through what the individual bonus payments were, it became clear that these were quite substantial payments and they were also tax exempt. And in the case of families with children they were also adding up to several thousands of dollars, which can be a decent proportion of their income.”
Job losses were most pronounced among skilled, full-time workers aged 25 to 44, the survey found. Dismissals increased sharply in the construction and professional services industries, while sales workers, particularly those working in retail and wholesale and trade industries, experienced a decline in the rate of job loss.
“There was some increase in unemployment, or some increase in underemployment, during the GFC, but most of the work force was untouched,” said John Buchanan, Director of the Workplace Research Centre at the University of Sydney, who was not involved in the study. “There was definitely a fear factor, but in terms of tangible impact on hours and earnings, it wasn’t so great.
"But there were areas where it hit hard. It hit those who were thrown out of work, and in particular it hit casuals and part-timers whose hours were cut. You’ve got to be careful how you read aggregated figures.
"This is a longitudinal study, and it doesn’t capture new entrants coming in. The retail numbers were probably more an adjustment through not recruiting as opposed to people losing their jobs.”
Associate Professor Wilkins said the downturn had a greater impact, at least initially, on workers usually thought to fare best in the labour market - highly-educated prime-age workers.
The data showed that 46.8% of people dismissed from their jobs were aged between 25 and 44, and 48.8% had a post-high school education qualification.
“I think it may reflect the nature of the origins of this economic downturn,” Professor Wilkins said. “It started in a financial crisis, and at least in the initial stages it adversely affected white-collar jobs. Certainly when you take a longer view, those relatively skilled workers were also the quickest to find new jobs.”
Life satisfaction levels had remained “positive or stagnant” over the nine-year period of the study - depending on how the data was assessed, he said. On a 10-point scale, average levels of satisfaction stayed at about 8. “In some respects, with all that’s going on in the world and in Australian society, it is a very remarkable fact that on average satisfaction with life here has broadly remained unchanged.”
People were most satisfied with “local” aspects of their life: their homes, their neighbourhoods and how safe they felt. On the whole, women were more satisfied than men.
“Even post the GFC, we saw negligible change,” Professor Wilkins said. “When you look at that data on household income, it’s perhaps not so surprising. There was also a period where interest rates were being cut, so people with mortgages were finding their living standards increasing quite appreciably.”