JobSeeker and JobKeeper reductions to test Australia’s wobbly economic recovery amid coronavirus
The patient is still limping badly but their crutches are being replaced with a walking stick. The question is whether they can remain standing or will fall, and we’re about to find out the answer.
The patient, of course, is Australia’s economy, ravaged by the COVID-19 pandemic and kept upright only by unprecedented government support.
But, from today, that support starts being wound back.
The $550 fortnightly coronavirus supplement for welfare recipients is now down to $250. For those on JobSeeker, it means their income will drop from $558 to $408 a week.
The other main crutch is being replaced on Monday, with the full-time JobKeeper rate falling from $1,500 to $1,200 a fortnight, and a new $750 JobKeeper part-time rate kicking in for those who were working less than 20 hours a week before the pandemic hit.
For Carley Elsum, who co-owns a restaurant in Cairns, JobKeeper has been much more than just a helpful prop to lean on.
“JobKeeper is definitely a lifeline for the business,” she says.
“If we were to head down the path that we just did and we had no JobKeeper we definitely wouldn’t be open today.”
It makes her fearful of whether her business can stand on its own two feet again as that support is gradually withdrawn.
While open, the business is operating at reduced capacity with the absence of overseas visitors hurting badly. And this would normally be peak season in Far North Queensland.
The next reduction in JobKeeper, by a further $200 for full-timers, will happen in January in the midst of her low season.
“We’re very concerned for the Cairns environment about the wet season,” she said.
“That January to March period is always very hard and without the international tourism and JobKeeper slowing down it’s going to make it very hard for us.”
Australia has regained half the jobs it lost
Carley’s experience is backed up by the official numbers from the Bureau of Statistics.
Detailed employment data released this week show hospitality has bounced back strongly since the first lockdowns ended, with nearly 130,000 jobs added during the three months to August.
Although that’s still less than half the 294,000 jobs lost during autumn, and the workforce remains down almost 18 per cent on pre-pandemic levels.
Arts and recreation saw an even bigger bounce back, relative to the size of the sector, with 53,000 jobs returning. But, again, employment there is also 15 per cent down on February’s levels.
Overall, a bit over 420,000 people got jobs back over winter. But, again, that’s only around half the jobs that were lost since February.
And that’s with the full rate of JobKeeper in place.
How many jobs are relying on JobKeeper?
Carley Elsum managed to keep her 14 full-time staff on with the support of JobKeeper.
“They went from being waiters and bar managers to delivery drivers and dishwashers,” she explains.
But she couldn’t afford to hold on to seven casual staff who weren’t eligible for the subsidy.
Sarah Hunter from BIS Oxford Economics said it was likely JobKeeper was flattering the true employment situation, but it was impossible to gauge by how much.
“You would think that some of those jobs are not viable and those people will lose work, but how many are we talking about?” she said.
It could be a large number, with close to 1 million employers and about 3.5 million workers covered by the payment.
The Government is expecting about 1.25 million of those workers to fall off the subsidy by the end of this year, with Victorians accounting for about 60 per cent of those remaining on it.
About 1.75 million people are expected to remain on the subsidy until its current expiry at the end of March next year, again, mostly in Victoria.
‘JobKeeper has been essential’
Melbourne-based advertising strategy director Dominic Carrico is one of them
The advertising company he works for, Ten Feet Tall, has been using the JobKeeper payments to subsidise staff wages.
With a ban on filming, the company’s ability to create ads has been hamstrung since the stage 4 lockdown, so it has been eating into its savings to pay its 20 staff their full wages.
“Given that we have incredibly strict lockdown measures, JobKeeper has been essential to maintaining a roof over my and my partner’s head,” Mr Carrico said.
But his partner, who was forced to close his retail business in the lockdown, has been on JobSeeker payments.
Not only is the maximum rate of his benefit being cut, it will now be means tested against Mr Carrico’s income too.
And Mr Carrico is deeply concerned his work won’t be back to normal by the time the JobKeeper payments are scheduled to end.
“We’re not anticipating that everything’s just going to go back to normal, it will be a few more months [once normal conditions resume] before we’re back to business as usual,” he said.
He believes staff cuts could be down the track for his company.
“If further restrictions come about and there’s no JobKeeper payments to keep us afloat, we will have to look at potentially some tough decisions in the future.”
Job losses spreading outside hospitality, services
Like Carley Elsum, elements of Mr Carrico’s story also show up in recent ABS data.
While the first wave of job losses during the pandemic disproportionately fell on young, low-paid women in the services sector, retrenchment is now hitting older, higher paid men across a range of industries.
The only two sectors that shed jobs over the three months to August were the male-dominated areas of construction (-11,200) and utilities (-14,200).
The latest ABS payroll data show men had more than double the rate of job losses as women over the fortnight from August 22 to September 5 and male employment is now down 5 per cent since the start of the pandemic against a 4.3 per cent decline for women.
The hit to male earnings has been even bigger, dropping 6.7 per cent since mid-March compared to a 0.9 per cent fall for women, possibly indicating that higher paid men are now losing jobs, while more of the female job losses remain in lower paid and/or part-time roles.
Perhaps surprisingly, mining is now showing the biggest decline in payroll wages (15.7 per cent), just outstripping hospitality.
While the August employment data was surprisingly strong, with more than a hundred thousand jobs added, recent payroll data has been showing a decline in jobs, and not just in Victoria.
Employers in New South Wales, Queensland, the ACT and the Northern Territory also shed workers off their payrolls.
Sarah Hunter says the Government should be keeping a close eye on the more timely payroll figures, especially as it rolls back its economic support.
“The Government has been flexible up to now in terms of changing policy and putting in place supports, if that [weakness] was to materialise I’d hope that they would look again and potentially change tack.”
That way, if the patient can’t yet support their own weight, the Government might be able to again catch them before they hit the floor.