Among working households in the lowest fifth of household income, half had less than $1350 in the bank.
“The meagre savings of many low income workers are a big worry because many are likely to be employed as casuals and therefore not have paid sick leave or annual leave,” said analysis by Mr Coates with the Grattan’s senior associate Matt Cowgill published on the Grattan blog.
These savings figures underscored the need for the Federal Government to help people through this crisis, said Mr Coates. “Without government help a lot of people will go to the wall,” he said.
Many companies were looking at a sustained period with reduced or no revenues, and would be cutting back on expenditures. That would cascade through the economy, impacting suppliers and others.
The Morrison government has announced a one off payment of $750 to about 6.5 million lower-income Australians in response to the Coronavirus.
But Mr Coates said the government needed to follow the UK Government’s example, which has promised to pay workers who lose their jobs or are put on leave about 80 per cent of salaries up to a maximum of about AU$5000 a month.
The current public health measures will deliberately instigate a recession, said Mr Coates. So the government should provide “income insurance” to keep households afloat, saying it should be seen as a “recovery measure” responding to the health crisis and not as a stimulus measure.
“In a matter of days, the economy has gone from nearly 60km/h to hitting a brick wall,” Mr Coates said. In contrast, it took several months before the fall out from the Global Financial Crisis cost jobs.
“The canary in the coal mine” were the hospitality workers who had already lost their jobs, he said.
Of the 12.5 million workers in the Australian economy, about 37 per cent are casuals or self employed and don’t have paid leave.
In Newtown on Saturday, the Khamsa Cafe started offering free food to casual workers, freelancers, and small business owners who had lost jobs, income or seen their hours reduced.
“Anyone who has lost an income can come by,” said Sarah Shaweesh, the owner of the cafe which offers Palestinian food.
On Saturday she fed about 30 people, and delivered some curry to people’s doorsteps. “They have lost jobs or are in isolation so not getting paid for work, or they have just come back from overseas,” said Ms Shaweesh.
Casual bartender Kris Recke is typical of those whose income has shrunk to next to nothing in the last few weeks.
His hours had been dropped from 40 to 50 a fortnight to only five, he said on ABC’s The Drum on Friday. “I’ve only got two weeks of savings,” Mr Recke said. Once that dried, it was looking “very bleak”, he said.
Sign up to our Coronavirus Update newsletter
Get our Coronavirus Update newsletter for the day’s crucial developments at a glance, the numbers you need to know and what our readers are saying. Sign up to The Sydney Morning Herald’s newsletter here.
Julie Power is a senior journalist at The Sydney Morning Herald.
Most Viewed in Business