Men less affected financially by separation than women

Women are more likely to find themselves falling into poverty after a relationship breakdown than men, especially women with older children, a new study finds.

New research shows women’s disposable household income declines by an ­average 29 per cent after a break-up.

Men emerge from relationship breakdowns in far better financial shape than women, who are at much greater risk of falling into poverty, especially when children are involved.

New research shows women’s disposable household income declines by an ­average 29 per cent after a break-up while for men it is just a 5 per cent fall.

The Melbourne Institute study – From Partnered to Single: Financial Security Over a Lifetime – found the risk of falling below the poverty line (household income below 50 per cent of the national median) more than doubled for women a year after separating.

For women overall, in the first year of separation the risk of poverty increased from 9 to 22 per cent (13 percentage points more than women in a relationship), while for men the poverty risk shifted from 9 to 13 per cent.

“Women with children below school age are 16 percentage points more likely to be poor in the year after separation than otherwise similar women with preschool-aged children who remained partnered,” the report, based on longitudinal data from the Household, Income and Labour Dynamics in Australia Survey finds.

Most at risk were women who didn’t have a job before they broke up and older women with school-age children.

Both groups either find it hard to move into employment post-separation or it may not be financially worthwhile because of welfare settings, the study finds.

Melbourne Institute academic Guyonne Kalb, co-author of the report, said women who weren’t employed before separating could find themselves in a “poverty trap” as their employment prospects relative to non-separating women fell further after separation, especially when older children were involved.

Professor Kalb said “prevention” policies that supported both people in a relationship to be ­employed, including flexible work hours and more equitable access to childcare, could help ­alleviate the risk women face on separation.

Both government and employers could create such policies, she said. “Women with young children may not have been out of the ­labour force for long, so they tend to return to employment, but for women with older children who aren’t employed when they separate, the prospect of finding a job is harder as their connection to the workforce has declined.”

The study also finds that the tax and transfer system might need recalibrating to support separated women into work, which is their best way to lower their risk of poverty.

“Separated women who are the main residential parent of a child are more likely to incur ­losses in income support ­payments or family tax benefits from every dollar earned, and at the same time are more likely to need formal childcare to facilitate their own employment than a woman who is living with the child’s other parent,” the study concludes.

“As a result, an employment opportunity that is financially worthwhile for a partnered woman may not be financially worthwhile for a separated woman. This suggests that policy ­reforms to reduce these cumu­lative impacts of tax rates, withdrawal rates in family support and income support payments, and the net cost of childcare that can trap recipients in poverty, should be on Australia’s policy agenda.”