Nearly half of all Australian households earning less than $40,000 a year said they went backwards financially last year, and only a third of households reported income gains, according to a private survey released by ME Bank.
The survey showed only the very wealthiest Australians reported high levels of “financial comfort” during 2016.
Instead, job insecurity combined with growing underemployment is hurting the majority of Australian households.
The authors of the report said their research is more evidence of the widening gap between the rich and the poor.
Orsolya Bartalis worked as a mine logistics manager in Western Australia making good money, but she was made redundant in January last year.
“There’s no gym memberships and also things like my kids, they want to have to latest cool shoes that aren’t necessarily in my budget.
“I have to basically say, ‘This is the amount I can put in, if you want to spend anything above that you have to find a way to raise the funds for it’.”
Fortunately Ms Bartalis has now started her own business, but she knows other Western Australians that are finding times very tough.
“I’m a pretty positive person so I just go, ‘Oh well what can I do next, how can I make money?’
“But I see a lot of people falling into depression, basically down and out, and feeling like there is no way out or have no idea what they can do next.
“I think we’ve got some more way to go down yet before it looks any better, although I did hear that they’re promising some new mining contracts and new jobs for WA but there’s normally a lead time for that so I think we’ve got some dark times ahead for a while.”
Ms Bartalis said she was concerned but hopeful for the long-term future.
“The only way is up from here,” she said.
Casuals looking for more work
ME Bank’s consulting economist Jeff Oughton said much of it has to do with the lack of work.
“When you look at that unemployment rate it’s 5.8 [per cent],” he said.
“Yeah, it’s a bit above what economists might say is the natural rate of unemployment, but there’s large underemployment.
“Indeed 60-70 per cent of people on part-time or casual jobs are looking for more hours work and more income.”
Mr Oughton said even those with shares and property face high levels of financial risk.
“It’s back to the levels of pre-GFC so house prices have gone back up, especially as you highlight Sydney and Melbourne, and the share market’s had a good run over the last few years as well and super balances are looking better.
“But at the end of each week income gains are very subdued and those people are still concerned about what would happen if there was a financial emergency.”
Unsurprisingly households on an annual income above $200,000 a year reported very high levels of financial comfort.