- Australia’s unemployment rate will nearly double from 5.1% to 10% by June, according to Treasury’s official forecasts.
- Released on Tuesday, the estimates essentially mean 700,000 Australians will lose their jobs before the middle of the year.
- Treasurer Josh Frydenberg said it could have been, with the government’s Jobkeeper package expected to safeguard 700,000 jobs that may have otherwise gone missing.
- Visit Business Insider Australia’s homepage for more stories.
In the space of just a few short months, the number of unemployed Australians will have essentially doubled.
Previewing the release of official government forecasts on Tuesday, Treasurer Josh Frydenberg was upfront about where the country was headed.
“Treasury expects the unemployment rate to rise to 10% in the June quarter from 5.1% in the most recent data,” the Treasurer said.
If accurate, it means the jobless rate would have essentially doubled in just three months, as 700,000 people are let go, adding up to a total of 1.4 million Australians out of work by the middle of the year.
However, without the $130 billion wage subsidy program the government unveiled last month, the number would have blown past two million and kept rising, the government said.
“In the absence of the $130 billion JobKeeper payment, Treasury estimates the unemployment rate would be five percentage points higher and would peak at around 15%,” Frydenberg said.
It’s largely consistent with what economists have been saying, with Westpac’s chief economist Bill Evans estimating that without the package, unemployment would have even hit 17%.
With its announcement, Evans and other major bank economists largely agree with Treasury’s ballpark 10% figure as Australia heads into an unavoidable recession.
In fact, if you compare what the unemployment surge looks like historically, it closely matches what Australia experienced in its last two in the early 80s and early 90s.
On both occasions, unemployment roared from sub 6% to a little over 10% and 11% respectively in the space of a year.
Of course, there are some big differences too, with a 2020 recession triggered by a global pandemic, rather than just an economic downturn. It’s the reason why this time around the government expects a reasonably sharp recovery once we’re out of the woods with COVID-19.
The hundreds of thousands of Australians applying for Centrelink over the coming weeks would certainly hope so.
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