Unemployment

Article last updated: 20/05/09

Involuntary unemployment is difficult to cope with at the best of times, but from a financial perspective, its impact can be devastating. In the short term, it creates hardship if you do not have savings to live on. In the long term, if you do not return to work quickly, and with a similar income, unemployment can create a significant barrier to you achieving your long-term financial goals.
Statistics¹
• In the most recent survey of retrenchment and redundancy in Australia, 52 per cent of those retrenched were aged 25-44 years.
• The most commonly affected male occupations were tradespeople and related workers.
• The most commonly affected female occupations were intermediate clerical, sales and service workers, and professionals.
• More than three-quarters of those retrenched were given notice of less than five weeks.

Be prepared
Understanding the changes taking place in the employment market is an important first step to minimising the risk of unemployment. We live in a world where a ‘job for life’ is no longer standard.

Research shows that one of the best ways to be prepared is to continue enhancing your education and training. People with higher levels of education tend to have lower rates of unemployment, especially long-term unemployment. By continuing to broaden and enhance your knowledge and skills, you can be more pro-active in managing your career.

Taking personal responsibility for your own career is vital, and by obtaining professional career guidance, you may be able to minimise the risks you face.

Manage the impact
Keeping an emergency money pot equal to three months of your take-home pay can help you ride out short-term stretches of unemployment. A cash management trust or an internet savings account can be useful for this purpose, by providing a safe place that is within easy reach, so you can get hold of your emergency fund when you need it.

While you cannot directly guard against the risk of unemployment, you can offset some of the associated risks. For instance, some insurance companies provide short-term cover for large debts.

Useful sites
www.workplace.gov.au
www.myfuture.edu.au




¹ 3266 Retrenchment and redundancy, Australia, ABS 2/8/2002