Victorian jobs slump amid stage 4 coronavirus lockdown, but ‘COVID recession’ bites elsewhere
Paula Evans, owner of boutique Tierra Alma in beachside Mordialloc, didn’t need the Australian Bureau of Statistics to tell her about the epic economic pain of Melbourne’s August lockdown.
“It’s been a really huge impact this time around with the stage 4 hitting Melbourne,” she said.
“I would say my business is down by 70 per cent.”
New data submitted to the Australian Tax Office (ATO) from payroll systems around the country show jobs fell 1 per cent in the month to August 8. But in Victoria, the hit was much harder.
“Over the month to 8 August, payroll jobs fell by 2.8 per cent in Victoria,” Bjorn Jarvis, head of Labour Statistics at the ABS, noted in the report, warning there might be even more bad news to come.
“Some of the initial impacts from the stage 4 restrictions are shown in the latest weekly data as they came into effect.”
Previous estimates put the cost to the national economy of Melbourne’s plunge back into stage 4 restrictions, which severely limit people’s movements and how businesses can operate, at almost $10 billion.
“Around 39 per cent of jobs lost in Victoria by mid-April had been regained by 27 June,” Mr Jarvis added. “But by early August this had reduced to 12 per cent.”
Compared to mid-March, when Australia recorded its 100th confirmed COVID-19 case, ‘jobs’, as seen in payroll information, were down 4.9 per cent nationwide.
The data shows there was a recovery between mid-April and mid-June — when most of Australia had successfully dealt with the first wave of coronavirus infections and slowed the spread of the disease — but that fell away again as the second wave hit.
ANZ’s senior economist, Catherine Birch, said the impact on Victorian employment was clear: payroll is down almost 8 per cent since March. For the rest of the country, it is closer to 5 per cent.
“The ABS noted that ‘some of the initial impacts’ from the stage 4 restrictions in Melbourne and stage 3 in regional Victoria were captured, but it’s likely the impact will be larger and clearer in coming weeks,” she added.
Young people, women recover jobs
Economically, the virus has pummelled young people and women. The new information provides some hope, with the recovery in employment driven by those groups.
The bureau found close to half (52 per cent) of jobs worked by women had been regained, compared to 19 per cent for males.
Payroll jobs worked by people aged under 20 increased 1.5 per cent nationally in the month to August 8, but there was a 5.6 per cent decrease in Victoria, understandable given the restrictions on sectors like retail and hospitality that employ a lot of young people.
“Female jobs recovery was greatest for those aged under 20, who also experienced the largest fall in jobs through to mid-April,” Mr Jarvis said.
The Weekly Payroll Jobs and Wages in Australia report, for the week ending August 8, 2020, shows some of the impact of what is currently among the most restrictive conditions for a major city globally, as Victoria fights to suppress a second wave of coronavirus infections.
‘Impact of the COVID recession’
Even though Tierra Alma’s online store has been busier since Ms Evans has been unable to open her doors, she is losing custom from regulars and people walking along what is normally a sunny, thriving retail strip.
“I know across the country a lot of people are unemployed, but in Melbourne, in particular with stage 4, there’s a lot of people who have lost their jobs and they just don’t have that excess income to be shopping online and purchasing clothing and handbags,” she said.
“They’re buying the essentials that they need to survive.”
Terry Rawnsley, national leader of economic and social analysis at SGS Economics, said the figures showed a stark split.
“Victoria’s doing twice as badly as the other states. New South Wales has some numbers that show it’s starting to recover, Queensland is patchy and the other states are mixed,” he said.
Of greater concern are that parts of the economy not particularly held back by stage 3 restrictions — in the way that, for example, cafes and restaurants were.
“When you look at the industry sector breakdown on employment, under stage 3 restrictions, you’re starting to see things in construction, administration … they’re starting to feel the impact of the COVID recession, not the COVID restrictions,” Mr Rawnsley said.
Three lost years of economic growth
The renewed lockdowns in Victoria and their effect on the national economic and jobs recovery has caused one of Australia’s largest banks to slash its forecasts.
National Australia Bank, whose forecasts are closely watched because of its monthly business survey that tracks the health of corporate Australia, now expects to see economic output (GDP) fall 5.7 per cent nationally this year.
NAB senior economist Tony Kelly also does not expect a speedy rebound.
“With the withdrawal of current fiscal stimulus in early 2021 we don’t really see a rebound in growth till mid 2021,” he wrote.
“As a result, we see GDP rising by around 3 per cent through 2021, but less than 1 per cent in year-average terms, with GDP not returning to its end-2019 level until early 2023.”
NAB’s economists are forecasting unemployment to peak around 9.6 per cent in early 2021, but remain at 7.6 per cent by the end of 2022.
The bank is also bracing for a 10-15 per cent fall in house prices, with the biggest falls in Sydney and Melbourne, which are being hit hardest by the double whammy of slowing population growth and rising supply.
NAB warned that price falls for commercial property, especially retail and office space in the Sydney and Melbourne CBDs, are likely to be larger still.
But Mr Kelly warned the effects will be felt across the nation.
“No state/territory is immune from the fallout of COVID-19,” he observed.
“While high-frequency indicators such as NAB’s internal data and Google mobility have notably weakened in Victoria, they have softened in the other states as well.”
At the start of August, Australia’s second-most populous city began a hard lockdown that included an 8:00pm curfew, no travel beyond 5 kilometres of your home, the compulsory wearing of masks when outside and severe restrictions on businesses that could open.
This practically shut all retail stores not related to food or medicine, closing manufacturing and shuttering most construction sites.
Victoria, outside of the capital, is on stage 3 restrictions that still ban social visits and restrict leaving your house to four key reasons: to shop for food and essentials; to provide care, for compassionate reasons or to seek medical treatment; to exercise; or to do work or study, if you cannot do it from home.
Since March, the directive of the State Government and health officials has not changed: if you can work from home, you must.
For Ms Evans, and her two staff, the future is uncertain.
“Oh, it’s really difficult,” she said.
“I’m on my own and I struggle to pay my bills, I’m struggling to pay my house rent. But I’m soldiering on.”
The stage 4 restrictions are scheduled to end in three weeks, but loosening them will rely on medical advice from the state’s Chief Health Officer.
“It’s really tough, we just have to sit tight and adjust things and work with what we’ve got,” Ms Evans added.
“The mental aspect of it is really, really difficult — we don’t know what the future holds.”