- There are to be an estimated 110,000 job losses when the JobKeeper wage subsidy finishes at the end of March.
- The forecast comes from Commonwealth Bank economists Kristina Clifton and Nicolas Guesnon who expect more than half of those to come from high risk industries like transport, accomodation and the arts.
- While distressing for those set to lose their jobs, the overall economic impact is expected to be “minimal” as slack in the labour market stops unemployment from rising sharply.
- Visit Business Insider Australia’s homepage for more stories.
Commonwealth Bank economists are forecasting major job losses when the government terminates the JobKeeper program at the end of the month.
With an estimated 900,000 Australian workers still receiving the wage subsidy, CBA expects 110,000 of those won’t be kept on beyond the month.
“We estimate that high risk industries will see up to 25% of employees on the JobKeeper payment payment lose employment, up to 10% in medium risk industries and 5% in low risk industries,” economists Kristina Clifton and Nicolas Guesnon said.
Around 69,000 jobs are expected to go in those “high risk” industries. Those include the transport, arts and recreation, accommodation and food industries sectors which remain “sensitive to international travel and also suffer badly when restrictions and lockdowns are imposed.”
Another 18,000 layoffs are expected in medium risk areas of education and retail, which remain exposed to the flow of international students and tourists.
Without a direct insight into the state of individual businesses, Clifton and Guesnon maintain their estimate remains “highly dependent” on how Australia reopens from here, but emphasise that “the risk lies with a larger number”.
Meanwhile the Prime Minister has suggested further support for the tourism industry could be forthcoming during a speech delivered on Tuesday. The package expected to be finalised this week will include low-interest business loans and tourism cash grants in an effort to stem further pain.
Unemployment progress to stall briefly
While economists have already forewarned Australia to brace for an impact, the disruption is expected to be a blip in the overall labour force picture.
For one, a record number of job vacancies indicates there is sufficient slack to absorb more than a quarter of a million out of work Australians. For another, the latest NAB business survey indicate employers are looking to continue their hiring spree.
There are currently 877,000 Australians recognised as unemployed, with the unemployment rate stuck at 6.4%. While the end of JobKeeper is expected to stall progress to lower it further, unemployment is expected to reduce into the second half of 2021.
Clifton and Guesnon contend that the $200 billion savings buffer collected last year will smooth over the transition between jobs.
“The JobKeeper program and other government support has left some employees better off financially than before the pandemic. So some people who lose jobs may feel in a position to take a break, especially if another job isn’t available straight away,” they said.
“If a person steps out of the labour market then they will not be counted as unemployed and will not put upward pressure on the unemployment rate. Rather the labour market participation rate goes down.”
That hypothesis won’t be tested anyway until the middle of June when the first full set of post-subsidy figures are due. In the meantime there’s bound to be some very anxious Australians.
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