Covid 19 coronavirus: who was the most financially affected?

One in three New Zealand households had yet to recover from their pre-Covid income in October and 11 percent were still seriously impacted with a drop of more than 30 percent.

A new investigation by the Commission for Financial Capability, the government’s monetary education arm, has revealed who has been most financially affected by Covid-19.

A survey of more than 3,600 households in October found that working families in manual occupations were hit hard and still likely to have low incomes.

These families are likely to be couples between the ages of 18 and 54 with children who rent, often with one parent at home and the other working in jobs such as construction, retail, and food and lodging services.

Workers in the public sector and those in knowledge-based sectors had fared much better, according to the research.

The percentage of people who still had low incomes was higher among households where the main respondent was between 55 and 64 years old, indicating challenges getting another job or additional work compared to younger workers.

Maori and Pacific households were also more likely to continue to have low incomes, with Maori households having the highest proportion of those whose incomes had dropped more than 30%.

Pacific households had the highest proportion of those whose incomes fell by as much as 30 percent.

Jane Wrightson, director of the Commissioner for Financial Capacity and Retirement Commissioner, said it was encouraging that the reduction in income was improving overall.

But financial resilience remained a concern, with 41 percent of households still exposed to high debt and little savings.

“Households in the exposed segment have increased their savings levels, suggesting that some of them realized the precariousness of their financial situation,” said Wrightson.

“We need to encourage them to keep going so that they are better prepared for the next financial crisis.”

Wrightson said it was also a relief to see that the high rate of inquiries from people wanting to withdraw money from KiwiSaver due to financial difficulties had not occurred.

“Your KiwiSaver is a long-term investment in your future that should only be accessed as a last resort. There are many other supports available, listed on the covid19.govt.nz website, that households can turn to first.” .

He said people who need help should use the free guides on the Sorted and MoneyTalks websites and free face-to-face guidance through the FinCap budget service.