Paving an even road out of crisis

If you had your ear anywhere near the ground during Australia’s most recent federal election campaign, you’d be forgiven for thinking that our economic recovery from the pandemic has been world-beating. 

The story on the street, however, is markedly different. 

In April 2022, just weeks before voters headed to the polls, researchers from ACU released a report titled Scarring Effects of the Pandemic Economy. 

Prepared in partnership with Catholic Social Services Victoria and St Mary’s House of Welcome, the report declared that COVID-19 should be seen as “not just a pandemic in public health terms – it is also a pandemic of job loss and job market insecurity”.

In an accompanying article on The Conversation, the report’s lead author, economic sociologist Dr Tom Barnes, said the measures put in place to cushion the pandemic’s economic impacts “failed to address rising financial pressure or exclusion of the poorest and most marginalised in our community”. 

In turn, this drove people to seek emergency relief in record numbers. During the lockdowns of 2020 and 2021, Australians in need flooded social service providers, including organisations offering emergency food and clothing, temporary accommodation, or help for victims of domestic abuse. In Victoria, some charities and service providers reported a 13-fold increase in the proportion of clients with no income.

“Our report pointed to problems with the unevenness of the economic recovery, the ongoing inequality, and the wounding effects of excluding migrants on temporary visas – and all of those things are still very relevant,” says Dr Barnes, senior research fellow with ACU’s Institute for Humanities and Social Sciences.

Then, in early 2022, with lockdowns seemingly a thing of the past, Australians were hit with a series of further shocks – widespread inflation, interest rate hikes, soaring rents and low housing supply – that sent many down a deeper hole. 

“We now find ourselves in the middle of a cost of living crisis, and the problems we identified in our report have been magnified, meaning we have declining living standards for a very large part of the population.” 

Victoria’s pandemic pain

When it comes to the effect that lockdowns had on employment, the report found that three groups in Australia suffered more than most. 

As Tom Barnes and his co-author Dr Scott Doidge from ACU Engagement contend, the pandemic was “worse for women, worse for young workers and worse for Victorians”.

In Melbourne and many regional areas, the lockdowns “profoundly affected the activities of social service providers”, leaving a “scarring effect” on society’s most vulnerable. 

To make matters worse, people who would normally volunteer for these organisations withdrew in large numbers. 

“Volunteers are the lifeblood of social services and the charitable sector, and without them, the sector simply doesn’t function as it could,” says Dr Barnes, who notes that for some organisations, volunteer shifts declined by more than half in 2021, and in many cases, have yet to return to pre-pandemic levels.

“There is a perfect storm of factors contributing to this crisis. We have people who’ve been permanently affected by the pandemic, alongside growing demands for assistance in the context of the rising cost of living, with groups of people who are desperate for support, and we yet have an insufficient number of volunteers to handle the rising caseload.” 

The regular citing of low unemployment figures as a sign that the recovery was on track has created a misleading view of social and economic wellbeing, the report found. As the Victorian Council of Social Service noted in its response, “When you dig down beneath the headlines, the reality of our post-COVID recovery looks a lot spottier and more uneven.” 

Meanwhile, while some are still recovering from the pandemic’s financial blows, others have benefitted.  

“During the lockdowns, there was a spike in demand in certain sectors, like online shopping and e-commerce, and certain trades in the building industry benefitted from people with disposable incomes doing more home renovations and so on, but it’s also the case that many businesses profited from the JobKeeper scheme,” says Dr Barnes, pointing out that some larger organisations who cashed in on the scheme still laid off huge numbers of workers. 

“There are cases where corporate profitability has ballooned, while at the same time, you have thousands of smaller businesses disappearing, and you have large groups of people doing it really tough.” 

Reflecting on the report’s overall findings, which were based on two years of research, Dr Barnes says it is clear that the so-called recovery has been “highly unequal and highly uneven”.  

“It highlights the inequality in our society through the pandemic, and on the tail of this, we have another crisis fuelled by corporate and company-driven inflation, while wages remain low because we live in an economy that is low-wage by design.” 

Inspiring positive change 

While the findings of the Scarring Effects report might seem all doom and gloom, it does offer some insights on how to better deal with present and future crises. 

As was noted by one of the partners of the research, Catholic Social Services Victoria: “Those involved in producing the report hope it will bring awareness to the true impact of the pandemic and inspire positive change as a result of the collaborative project.” 

So, what needs to change in order to address the inequality that the report highlighted? 

The authors suggest that governments at both federal and state levels must recognise that millions have been permanently affected by the pandemic, and that “community members experiencing the most vulnerability are being left behind”. 

The report calls for a rise in key welfare transfers like JobSeeker, renewed government investment in public and social housing, and ongoing and expanded funding for social service providers, including those who provide emergency relief and accommodation. 

Higher wages for low-paid workers could also play an important role in easing financial pressure on those most vulnerable. As well as his role in preparing the Scarring Effects report, Tom Barnes was a contributing researcher to the Australian Catholic Council for Employment Relations’ submission to the Fair Work Commission’s wage review.

The submission called for a 6.5 per cent increase to the minimum wage – the highest among those made to the review – amounting to around $50 per week for the lowest-paid workers.  

While business groups have long rallied against wage increases, Dr Barnes’ analysis found that a rise of this magnitude was both affordable and necessary to address the growing gap between rich and poor. 

He says that Australia’s economic prosperity in recent years has been predicated on extremely low wages for many workers – a feature that predates the pandemic-fuelled financial crisis. 

“This reflects growing and sustained inequality, and it reflects the fact that the prosperity our nation has experienced in recent decades has not been experienced across the board,” he says. 

“If we don’t address this inequality, we are looking at a widespread decline in living standards. But I believe it is possible for employers and business groups and political leaders to take an enlightened view, to look at the world beyond profits and growth, and to actually see things through a lens of social justice and the common good.”  

Dr Tom Barnes is an economic sociologist and senior research fellow at ACU’s Institute for Humanities and Social Sciences. His research primarily focuses on insecure, precarious and informal work.

The report Scarring Effects of the Pandemic Economy was researched in partnership with Catholic Social Services Victoria, the peak body for over 40 organisations which collectively assist over 200,000 Victorians every year, and St Mary’s House of Welcome, a non-profit centre in central Melbourne which provides basic essential services to people experiencing homelessness, poverty and social marginalisation. The research was activated through the Stakeholder Engaged Scholarship Unit at ACU. 

Learn more about ACU.