Australians survive “mild downturn” that was the financial crisis unscathed, apart from young graduates

Most Australians increased their wealth in the aftermath of the global financial crisis, with young graduates the main group to be hit by the crisis according to the Household, Income and Labour Dynamics in Australia survey.

The research undertaken by Melbourne University, which involves a study of 7,682 households, found that household income grew in the 2008-09 financial year thanks to Federal Government stimulus packages.

The report said the packages combatted the negative effects of the global financial crisis with the median household income increasing by $2,802.

Among those who lost their jobs during the economic downturn, the hardest hit were skilled full-time workers aged between 25 and 44 years in the construction and professional services industries.

Employees aged 25 to 44 accounted for 46.8% of those dismissed in 2008-2009, the period immediately following the crisis.

There was also a big jump in the rate of dismissals among workers with a university degree.
Between 2006-2007 and 2008-2009, tertiary educated employees went from suffering 10.7% of all losses to 16.2%.

Roger Wilkins, the associate professor at Melbourne University who is the author of the HILDA study, told SmartCompany this morning that the longitudinal nature of the study meant researchers were able to go back to the same people year after year to see how the financial crisis affected them.

“We found that most household incomes increased very strongly in the immediate wake of the global financial crisis,” says Wilkins.

“They rose quite substantially and the real driver of that were the raft of stimulus cash bonus payments from the government in late 2008 and 2009, which amounted to several thousand dollars for many families.”

Wilkins says households with mortgages also benefited from lower interest rates which slashed mortgage payments, while wage growth remained “reasonably high”.

“That combination of factors meant that in the immediate period afterwards most Australians were doing pretty well,” says Wilkins.

Researchers also found a marked increase in satisfaction with employment opportunities in 2009, which is the first time participants were interviewed after the onset of the crisis.

“One of the more unusual features of the economic downturn was that initially those who experienced the greatest increase in job loss was relatively skilled prime age workers, typically you expect to see less skilled workers suffer first,” says Wilkins.

“That probably can be pinned to the origins of the downturn being a financial crisis, so initially it was white collar jobs that were the first to be lost.”

But Wilkins says those same skilled young workers were also the most successful in quickly regaining new jobs.

“This needs to be couched in the context of it being a very mild downturn,” he says.