- The JobKeeper wage subsidy has been cut to $500 per week for 1.6 million eligible workers on Monday.
- The reduction marks the final three month stretch of the cornerstone economic support program launched in March.
- It comes as Sydney faces a new coronavirus outbreak, and the economy goes through a critical transition.
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Australian employees face the prospect of increasingly insecure work, with just 90 days left of the federal government’s wage subsidy program.
From Monday, weekly JobKeeper payments will reduce to $500 from $600 per worker for eligible businesses, as as the $50 billion-plus support program enters its final three months.
While the number of recipients has halved in the last six months, the latest figures show the wages of 1.6 million Australian workers are still being supported directly by the government.
Separate economic forecasts meanwhile have the JobKeeper reduction coinciding with a lift in unemployment to 7.5%. While down from the 8% anticipated previously by Treasury, the expected lift signals hundreds of thousands of job losses are to come.
With some months left to play out, those forecasts are open for further adjustment, but the federal government looks unlikely at this point to keep its cornerstone support policy alive.
“The Morrison Government has always maintained that JobKeeper is a temporary program designed to taper off as economic confidence and momentum builds,” Treasurer Josh Frydenberg has previously said.
New coronavirus cases cast doubt on economic resurgence
Certainly up until mid-December, the economy looked like it was rebounding back to normal.
A new cluster of Sydney cases however threatens to derail that trajectory, with states ending what had been a short-lived ceasefire, and shutting their borders around Christmas.
While health authorities are still scrambling to contain and identify cases, an early comparison of the NSW Health stats shows the current outbreak has so far outstripped Sydney’s July outbreak linked to the Crossroads Hotel.
A similar outbreak now could threaten to keep state borders shut for weeks, heighten business restrictions, and again erode consumer confidence, further hurting the Australian economy.
If such a situation were to transpire, it would do so at the same time that government support is being slashed, including JobKeeper for employees and businesses, as well as heightened JobSeeker payments for around one million unemployed Australians.
Calls for more support
While federal opposition agrees JobKeeper will need to be phased out eventually, it has called on the government to stop cuts in the midst of business uncertainty.
“The pandemic isn’t over. Not even close. But at the same time outbreaks continue across the country, Scott Morrison is pushing ahead with a pay cut for vulnerable workers,” Federal Labor Leader Anthony Albanese said on Monday.
While it’s unclear what support may look like in the coming months, there does appear to be a broad consensus that there is a need for something.
“At the top of the risks to our economy are the federal government reducing or removing fiscal support from business and employment too early,” Innes Willox chief executive of national employer association Ai Group said.
That may take a different form to JobKeeper, with Willox calling for targeted assistance for businesses and industries that have been hit hard by the pandemic.
“The next couple of months will be critical in signalling whether higher household confidence translates into enough additional spending to convince businesses to continue to lift employment and to commit to additional investment,” he noted in a report released late last month.
If COVID-19 cases continue to rise, and the economic recovery stumbles, pressure will mount on the Morrison government to do more.