Social consequences of the Corona crisis in Austria

Social consequences of Corona crisis in Austria
survey shows increasingly worrying situation
by Gerald Gogola and Veronika Heimerl
[This article published on 4/11/2022 is translated from the German on the Internet, https://awblog.at/soziale-folgen-der-corona-krise/.]

Statistics Austria's new survey "So geht's uns heute" ("This is how we are today") analyzes the social consequences of the crisis around two years after the start of the pandemic. These are serious, unequally distributed and hit disadvantaged groups of people particularly hard. More than 2 million people are affected by income losses. Many cannot afford the basic necessities of daily life. This problem has worsened significantly since spring 2021.

Survey "How we are today" as a social crisis monitoring tool

Statistics Austria has, for the first time, conducted the survey "So geht's uns heute", financed by the Ministry of Social Affairs and Eurostat. The aim of the survey is to identify the social effects of current crises at an early stage and to monitor them on an ongoing basis. To this end, the survey is conducted every three months. In the panel survey, the same people are interviewed repeatedly in order to measure changes in a targeted manner. The focus is on income development, financial difficulties and the well-being of people in Austria. Over 3,500 people between the ages of 16 and 69 participated in the first wave of the survey in November and December 2021. The results are representative of the entire population and allow social vulnerability to be analyzed.

Over 2 million people with income losses

The survey focuses on the development of incomes in the wake of the Corona crisis. Two million people in Austria - one third of those surveyed - say they have been affected by income losses in the past year. Vulnerable groups such as the unemployed, unskilled workers and single parents are particularly hard hit by the drop in income.

The main reasons for the loss of income are reduced working hours or reduced wages due to short-time work - and the loss of a job. Another reason for the loss of real disposable income is the sharp rise in inflation. This development is likely to worsen due to the further increase in inflation since the survey.

The Austrian government has therefore put together a 1.7 billion euro package to cushion rising prices. Among other things, the inflation compensation for particularly affected groups will be doubled from 150 euros to 300 euros. In particular, this will benefit recipients of unemployment benefits and unemployment assistance, recipients of compensatory allowances and student grants, and households receiving social assistance or minimum security benefits. The package also includes an energy voucher worth 150 euros for each household. The impact of these measures will be seen in the next waves of the "So geht's uns heute" survey.

Many people who experienced income losses in 2021 already had low household incomes before that. Around 850,000 people have to get by on an income of less than 1,000 euros per month (standardized to a one-person household).

Falling and low incomes mean that numerous people have difficulty making ends meet. According to the survey, more than 850,000 people can only cover their household's current expenses with difficulty or great difficulty. For them, their income is no longer enough to get by. Such financial difficulties are also evident in late payments. 430,000 people had fallen behind with the payment of a loan, mortgage or housing costs in the course of the previous quarter.

Based on these results of the "How We Are Today" survey, it is evident that the Corona crisis has had a significant impact on incomes and significant segments of the population are having difficulty making a living. Vulnerable groups of people such as the unemployed, those in unskilled occupations or single parents are particularly hard hit.

Housing costs are a massive financial burden

Whether one's income is sufficient to live on often depends on housing costs. These account for the largest share of expenses, especially for people living in rented apartments. For 825,000 people, housing costs represent a heavy financial burden.

Those who felt particularly burdened by housing costs were people who had suffered income losses in the wake of the crisis, people with low incomes and the unemployed. In these groups, one in four to as many as one in three said that housing costs were a heavy burden.

Not only in retrospect, but also for the future, numerous people expect problems with housing costs. 732,000 people expect to face payment difficulties with their housing costs in the next three months. However, late payment or debt on housing costs is considered particularly dangerous, as it can mean delogation and homelessness in the worst case scenario.

The Ministry of Social Affairs is combating the problem with the Wohnschirm program. This program supports tenants who are no longer able to pay their rent as a result of the pandemic and are therefore threatened with the loss of their home and with eviction. Rent arrears are covered or the move to an affordable apartment is financed. Regional counseling centers in all provinces ensure low-threshold access throughout Austria. 24 million will be available by 2023.
Material deprivation on the rise

Many everyday goods and services present people in Austria with massive financial challenges. 1.7 million people cannot afford to pay unexpected expenses of 1,300 euros. 369,000 people cannot keep their homes adequately warm in November/December 2021 for financial reasons. 363,000 people cannot feed themselves adequately for financial reasons. All these indicators of lack of necessities (material deprivation) worsened significantly in 2021 (see graph). For some indicators, there was even a multiplication. For example, the proportion of people unable to keep their homes warm quadrupled over the year.

Challenges in the fight against the social consequences of the crisis

Statistics Austria's survey "So geht's uns heute" (This is how we are today) impressively shows the social consequences of the Corona crisis in Austria. Considerable social vulnerabilities have become visible, although these are very unevenly distributed. Unemployed people, people with a maximum of compulsory schooling and also single parents and families with several children are most affected. If the goal is to reduce poverty in Austria, comprehensive measures are needed to combat or cushion the currently rising inflation. These measures should be targeted in particular at vulnerable groups of people who are currently barely able to make ends meet on their incomes. Possible measures include adjusting social and transfer benefits to inflation or comprehensive reforms of social assistance and unemployment insurance to combat poverty.

Further waves of the survey "So geht's uns heute", which is published quarterly by Statistik Austria and the Ministry of Social Affairs, are an effective instrument for monitoring the further consequences of the crisis.

Gerald Gogola is an economist in the Department for Fundamental and Research Affairs at the Federal Ministry of Social Affairs, Health, Care and Consumer Protection.

Veronika Heimerl is an economist in the Department for Fundamental and Research Affairs at the Federal Ministry of Social Affairs, Health, Care and Consumer Protection.