Despite the resilience of the New Zealand economy through the biggest shock the world's had in nearly a century, one-in-three Kiwi households are still bringing in less than they were at the start of the year.
In October, the Commission for Financial Capability (CFFC) surveyed more than 3600 people responsible for their household expenditure. While 11 percent reported higher incomes than in February, 33 percent said they had less.
Groups hit hardest included renters, Māori and Pasifika and those in precarious employment. Around 12 percent are in 'serious financial difficulty' with multiple creditors, many of whom were struggling for work before COVID-19, which has only "intensified their hardship", according to the CFFC's new report Impact of COVID-19 on Financial Wellbeing, released on Tuesday.
Another 24 percent are in 'some financial difficulty'. Together, the number in 'serious' and 'some' difficulty has increased between April and October - but not by as much as initially feared, said Retirement Commissioner Jane Wrightson.
"During lockdown there was quite a high number of people enquiring into how to access their KiwiSaver funds, which was of great concern to us," she told Newshub.
"This is long-term savings, it's not meant to be touched. What we thought was panicking around that turned out to be just that people were checking out what their entitlements were and what their options were. While the number of hardship withdrawals has gone up, it hasn't gone up anywhere near as high as the initial level of enquiries suggested, which is a very good thing."
The Government spent billions on relief payments to encourage employers to keep staff on, rather than let them go, during the lockdowns and resulting economic downturn.
Forty-one percent of households were not in any immediate financial difficulty, but had little resilience to further shocks - their incomes have likely recovered, but they might have high debt and low savings. Wrightson says many of them would never have sought assistance before.
"These are generally speaking couples aged between 18 and 54, but within that cohort people with children, people who are probably renting, who might have one person at home and one person in an occupation which might be a bit precarious," said Wrightson.
"The people who haven't been in this situation before are generally speaking not aware that there is a fair bit of help they can access if they want to. There's our Sorted website, which is absolutely the first place to go to for independent information about where to start and what to do... you can get face-to-face help through the Government-funded Money Talks line, you've got budgeting services.
"People in this cohort are not generally speaking used to face-to-face and might be a bit shy about that, but they needn't be. There's an increase in these services and the people running them are extremely good at helping you sort through your personal life. It's like most times when you get yourself into trouble - you sometimes can't see the woods for the trees, and there are systems and people out there to help you."
Almost a quarter (23 percent) of households were doing fine - this number is down on February, the report saying it appeared to be due to a loss of savings rather than incomes, suggesting it had been spent on assets like property, which has undergone a boom this year despite the recession.
When it comes to age, the biggest losses in income were reported by people aged 55 to 64 - Wrightson saying this group would find it hardest to get back into employment after being let go.
"It's diminishing, I think, having to try to look for work at that age when the chances of rejection are quite high. But of course it doesn't stop you, and you need to get quite creative... simply applying for jobs online, existing jobs, is usually not the right way to do it... you've got to leverage the contacts you've got. People who are older have had much more life experience in managing money - they will do okay. It's just a reasonably hard time."
Other findings in the report include:
- half of all Pasifika households who tried to cut a deal with people they owed money were turned away, compared to just 32 percent of Pakeha;
- Māori financial wellbeing, on a par with Pasifika in April, was now worst-off
- half of all employees think it's 'not at all likely' they'll lose their jobs in the next three months, up from 44 percent in April
- men were less likely to lose their jobs than women this year
- those in the 'secure' financial group were very likely to have a mortgage-free home, be Pakeha, live in Wellington, and work in the public service.
- people who rent are now more than twice as likely (5.3 percent, down from 5.5 percent in April) to have arrears owing to their landlord than mortgage-holders to their bank (2.3 percent, down from 4.5 percent in April).