COVID-19 is swiftly claiming lives and livelihoods worldwide. While it is first and foremost a health crisis, measures to slow its spread have stopped major economies in their tracks simultaneously.

Estimates of its socio-economic effects are grim, with the UN Secretary General calling the pandemic "a defining moment for modern society".

The pace of decision-making is staggering. In mid-March the Board of the Reserve Bank of Australia noted "it was likely that Australia would experience a very material contraction in economic activity, which would spread across the March and June quarters and potentially longer".

Within three weeks, the federal government had committed $320 billion - 16.4 per cent of annual GDP - to cushion what was by then the inevitable economic blow for households and businesses.

As businesses began to close their doors, fault lines in Australia's welfare system were laid bare. Long-term job-seekers who had been pushed to the margins of the labour market, society and the economy were in crisis, and an army of newly unemployed people were joining their ranks.

Despite repeated calls to raise the rate of income support, unemployment benefits had not increased in real terms since 1997. The repeated rationale for keeping the rate of what is now called the JobSeeker Payment below the poverty line was that it was a transitional payment designed to encourage people to actively seek work.

The message from successive governments of all political persuasions was that the best form of welfare is a job and that anyone willing to work could find a job, despite overwhelming evidence to the contrary.

Before COVID-19, rolling policy changes had gradually moved people facing complex barriers to work from other benefits into the employment services system.

At the end of 2019, more than 700,000 unemployed people were looking for work and a million underemployed people were seeking additional work.

Over a similar timeframe, changes to the nature of work, the rise of the gig economy and the growth of contract, part time and ad hoc employment in skilled industries like health, allied health, ICT and education saw the number of Australians without paid leave entitlements rise to an estimated 37 per cent of the national workforce.

Combined, these factors posed unprecedented risk as the pandemic emerged. As one million people lined up to enter Australia's welfare system without warning - casual and permanent employees who lost their jobs, sole traders, contract workers and the self-employed - it was clear that the practice of attributing unemployment to individual inadequacies and providing unemployed people with punitive levels of income support had to change, and change quickly.

Governments have faced economic challenges and pandemics before - the Spanish Flu, the Great Depression, the recessions of the 1980s and 1990s, and the Global Financial Crisis. Lessons have been drawn from the responses to and the aftermath of each, and stimulating the economy is a vital lever for recovery.

But COVID-19 poses new and complex challenges for governments trying to sustain economic activity in a global marketplace with entire populations out of circulation and in need of health care.

In line with a number of other countries, Australia has substantially increased income support for job-seekers (temporarily), streamlined and accelerated access to income support, and allocated supplementary payments to welfare recipients.

This will go some way toward redressing disadvantage and keeping people out of crisis. But history shows that a reduction in the unemployment rate is likely to lag behind economic recovery, and that the nature of work changes after prolonged disruption to the labour market.

To address that issue, complementing the JobSeeker Payment, the JobKeeper Payment offers a temporary subsidy for employers to continue paying their employees through a period of "business hibernation".

Keeping workers out of the welfare system and connected to employers may prove to be an effective strategy to revive businesses quickly post-pandemic, but it will hinge on the duration of the crisis.

It's too soon to see the full ripple effect of COVID-19, but we are already seeing policy action in the welfare-to-work space that would have been unthinkable a month ago.

Proposals that have been simmering or tested in different contexts, like Universal Basic Income, have gained traction. As this crisis plays out, people who lose their jobs will be drawn into new industries, different types of employment and different ways of participating in the economy. There are tough times ahead, but the premise that unemployment is an individual problem can no longer stand.