At least 73,000 households run into financial problems within three months if the breadwinner loses his income. This is despite the WW safety net and the Temporary bridging scheme for independent entrepreneurs (TOZO). This is the conclusion of the Netherlands Bureau for Economic Policy Analysis (CPB) and the Netherlands Authority for the Financial Markets (AFM) on the basis of a stress test.
The test did not look at unexpected expenses, such as the repair of a broken car. Therefore, the impact on households affected could be even more severe. “What we are assuming is that people are able to adjust their spending pattern with immediate effect. But setbacks are not included in the calculation of the stress test,” says Debby Lanser of CPB. The overview of fixed costs may not be complete either.
Precisely the most vulnerable households run the greatest risk of losing their jobs in the corona crisis, CPB says. They are often on lower incomes, single people or single earners and young people. “They have often built up very little wealth and quickly recover if they spend more than they receive
“If this happens to you, there is no way out,” says Lanser. “Then you won’t be able to pay your monthly costs.” It concerns 1 percent of the employees and 4 percent of the self-employed. Self-employed people are four times more at risk of getting into trouble than other employees. Without the TOZO safety net, this risk would be ten times greater.
Recovery takes a long time
Even if the coronavirus is brought under control quickly, recovery will take a long time, CPB recently wrote in another report. Unemployment will only have fallen back to its previous level after a sharp rise of about five years.
People who are unemployed and find a job again will lose income. This is especially true for people who have not had a job for a long time and therefore lose skills and knowledge.
If the loss of income lasts six months, the number of households that it does not save rises to 106,000, the CPB says.