Sydney’s second city-wide COVID lockdown is hitting payroll jobs harder than its first

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The extended lockdowns in Sydney have hit its payroll jobs harder than last year’s lockdowns, with construction jobs hit significantly hard, economists say.

New data show payroll jobs in Greater Sydney have fallen nearly 9 per cent since lockdowns began on June 26, with construction payrolls dropping more than 22 per cent across New South Wales.

Westpac economist Justin Smirk says it’s clear the city is suffering, with the economic damage gaining momentum.

“Sydney is being hit at least as hard, if not harder, this time than it was in early 2020,” Mr Smirk wrote in a note to clients.

“Sydney payrolls contracted 4.9 per cent in the last two weeks to be down 8.9 per cent since the start of the lockdown. In early 2020, the peak to trough in Sydney payrolls was -8 per cent.

“It does appear that the negative momentum in Sydney is accelerating,” he said.

However, Mr Smirk also said some care had to be taken with the payroll data, because of changes the government had made to disaster relief payments for these lockdowns.

What does the payroll data mean?

The ABS classifies payroll jobs as employee jobs for which a payment is recorded through the Single Touch Payroll system to the Australian Tax Office.

Payroll data count jobs, not employees.

The payroll series is different from the ABS’s monthly labour force survey, which counts the number of people employed, rather than the number of jobs.

However, this lockdown is very different from last year’s lockdown in at least one major way.

In last year’s lockdowns, when workers received emergency government support it came from JobKeeper, and that meant they were “paid” via their employer through the payroll system — so they remained in the payroll series and they were considered employed.

But this time things are different.

In these lockdowns, the COVID-19 disaster payments are paid directly to workers, not via employers.

And that means workers who receive the emergency payment will fall out of the payroll series, but they could still be classified as employed if they haven’t lost their job (for example, they may have been temporarily stood down, or worked zero hours and not been paid anything by their boss, but they haven’t been officially let go).

Mr Smirk said that made it difficult to directly compare the payroll data in this lockdown to payroll data in last year’s lockdowns.

However, he said Greater Sydney, and New South Wales generally, had clearly been hit hard by these lockdowns, with the significant fall in payrolls.

He said next month’s labour force data would capture much of the damage with different data, when “hours worked” drops off significantly.

“In NSW, construction payrolls fell 14.5 per cent in the last two weeks to be down 22.8 per cent since the start of the lockdown,” he said.

“This is a significantly larger hit than seen in early 2020 when NSW construction payrolls fell 4.9 per cent.

“This is also true for both accommodation and food services and retail payrolls, which have contracted 32.8 per cent and 11.4 per cent respectively since the start of the lockdown, compared to a 14.4 per cent and 1.2 per cent decline respectively back in early 2020,” he said.

Payroll data captures recent destruction, especially in NSW

Bjorn Jarvis, the head of labour statistics at the ABS, said in the last fortnight of July, among the larger employing industries, accommodation and food services, retail trade, and construction had the greatest share of payroll job losses across the country.

“The latest fortnight of data coincided with increasing restrictions in the fourth and fifth weeks of the lockdown in New South Wales, including a pause in construction activity,” Mr Jarvis said.

“It also included lockdowns in Victoria and South Australia, and travel and border restrictions across all states and territories.

“Payroll job losses in the accommodation and food services, retail trade and construction industries accounted for 44.3 per cent of job losses across Australia in the second half of July, and 45.4 per cent in New South Wales.”

New South Wales accounted for the largest share of national job losses in all three industries, accounting for around half of payroll jobs lost in accommodation and food services, around two thirds in retail trade, and around three quarters in the construction industry, the ABS said.

Payroll job losses follow fall in unemployment rate

The payroll job losses have coincided with a counter-intuitive fall in the official unemployment rate.

In July, the national unemployment rate fell from 4.9 per cent to 4.6 per cent — to a 13-year low.

However, that occurred because thousands of workers left the labour force altogether, especially in NSW, which meant the pool of officially unemployed people became smaller nationally.

The by-product of that was the official unemployment rate fell, but it wasn’t for good reasons.

Nonetheless, economists expect the official unemployment will rise again in coming months, as the economy flirts with recession.

Commonwealth Bank’s economics team expects the national unemployment rate to jump from 4.9 per cent in June to 5.6 per cent in October.

By business reporter Gareth Hutchens (Original ABC Article)