In austerity-driven economies, the incomes of the poorest citizens have become the collateral of the recession. Their rights to benefits, living standards and employment opportunities risk being diminished to aid the short-term repayment of the country’s debt.
Overseas, austerity has been seen to bring about an increase in casual labour, which comes with job insecurity and loss of employment benefits. Employing more casual workers makes it easier for employers to stop giving them work if they want to get rid of them to reduce expenditure. This makes it harder than ever for people who only have access to casual jobs to sustain a liveable income, considering their need to wait (maybe months) before they can secure welfare benefits once their casual employment ceases to provide an income.
In addition to this casualization of the workforce, since the implementation of austerity in debtor nations, unemployment has climbed: in Greece, as high as 26.8% — the European average was 11%. Furthermore, 5.5 million young people under 25 are now unemployed in the European Union. This has a crippling effect on the poorest citizens in a country. Of particular concern is the income security of young people where austerity is the core policy. They may be forced to live with their parents for an extended period of time, placing a burden on their families. For many, living with family is not an option, and the consequences of unemployment are even more dire.
While unemployment climbs, welfare benefits should help to safeguard against inequality. Where welfare benefits are strong, inequality is reduced and there are lower rates of financial disadvantage. However, where austerity has become the core policy, there is a rise in income inequality, in part because welfare is a frequent target of cost-cutting in austerity-driven economies.This is especially the case with the 2014-15 Budget in Australia (see above).
Austerity measures negatively impact the poorest in society, but reducing opportunities for paid work, and by directly cutting income support payments.