Data released by Treasury reveals that as of May 11th, almost 1.4 million people have accessed their superannuation early, and more than 463,000 of them were under the age of 30. Young people aged between 26-30 withdrew from their superannuation funds at a higher rate than any other demographic cohort in Australia. Following closely, young people between 21-25 accounted for 172,000 of the withdrawals and 23,500 were under the age of 20.
Despite 581,700 women accessing their superannuation during the COVID-19 crisis, Treasury admits it has not done a gender analysis on the long-term impacts of early superannuation withdrawals. This is not surprising given that the government has, to date, failed to conduct any research or analysis into the gendered impacts of the pandemic to better inform policy decisions that affect millions of people in Australia.
Young women have been hit hard by the COVID-19 crisis, with large numbers experiencing unemployment or underemployment as 9.9 per cent of workers aged under 20 and 8.8 per cent in their 20s have lost their job since the crisis started. When you look at workers over the age of 30, that figure reduces to 5.5 per cent. Jobs have slumped 8.1 per cent for women compared to 6.2 per cent for men and hours worked by women have reduced by 11.5 per cent, compared with 7.5 per cent for men.
Young women are particularly affected due to their overrepresentation in crisis affected industries such as retail, hospitality and childcare as well as in casual employment. Job losses are heaviest in accommodation and food services where 40 per cent of those losing work are young people aged 20-29. Women make up over half of the 950,000 casual employees ineligible for income support payments and young women aged 15-24 are more likely to be contracted on a casual basis compared with workers over the age of 25.
Accessing superannuation may offer tempting relief for those experiencing financial stress due to job loss and exclusion from income support payments such as JobKeeper. Shadow Treasurer Jim Chalmers points to unnecessary exclusion from JobKeeper as the reason why young people are being forced to withdraw from their super.
However, this could have significant long-term consequences. Early modelling shows that a 20-year-old woman withdrawing $20,000 from superannuation today could lose $120,000 by the time they retire. A 30-year-old-woman could lose $100,000. As well as losing out on compound interest, Christina Hobbs from Verve Super explains withdrawing super now means cashing out investments when stock prices are down.
Created by men, the discriminatory nature of Australia’s economy means that young women work within a system which does not provide for their retirement. The persistent gender pay gap, high rates of part-time and casual work for multiple employers thus missing out on $125 million of employer superannuation contributions, unrecognised unpaid care work and long periods of parental leave all negatively impact on women’s financial security.
These factors all contribute to women retiring with, on average, 47 per cent less superannuation than men. It’s clear that young women withdrawing from their superannuation today will face increasingly serious repercussions for their future financial wellbeing.
As a society, we need to consider which values should underpin Australia’s economy as we snap back from the pandemic. COVID-19 has shown us the importance of unpaid care work and how reliant we are on the essential workers within female-dominated industries. It is time that we start valuing the work performed by young women in Australia and paying for it appropriately.
We can start by making some immediate changes to policies including expanding JobKeeper to include casual workers and those on temporary visas and extending the Coronavirus supplement to those on the Disability Support Pension.
In the long-term, we need to look at:
- A radical reform of our social security system to ensure no one is left behind
- A radical reform of Early Childhood and Care
- A recognition of women’s diverse economic contributions and a reviewing of Australia’s superannuation system
- Investing in family violence prevention and specialist services
- Investing in long-term employment and education opportunities for younger generations
- Investing in affordable housing for women experiencing homelessness or living in unsuitable housing, particularly in regional areas
Without these short- and long-term measures, young women will be further pressured to run down a superannuation nest egg they don’t have and risk joining the growing cohort of older women experiencing financial stress and homelessness.