Between 14 and 26 per cent of Australian workers could be out of work as a result of the coronavirus shutdown, according to a new Grattan Institute working paper.
Shutdown: estimating the COVID-19 employment shock warns that the crisis will have an enduring impact on jobs and the economy for years to come.
More than half of all workers in the hospitality industry could be off work, as will many workers in retail, education, and the arts.
Lower-income workers are twice as likely to be out of work as high-income earners. Younger Australians and women are also likely to be hit harder, because they are more likely to work in occupations and industries most affected by the shutdowns and spatial distancing measures imposed to slow the spread of the virus.
‘If our estimates are even close to accurate, Australia is facing either the worst or one of the worst economic downturns in its history,’ says lead author and Grattan Institute Household Finances Program Director, Brendan Coates.
Warning of the dangers of a ‘second wave’ hit to the economy even after the immediate health threat eases, he says: ‘History tells us that recovery from periods of high unemployment is rarely fast.
‘The longer this downturn goes, and the worse it gets, the less likely the labour market and the broader economy can spring back afterwards.’
Grattan researchers used a range of methods to estimate the size of the COVID-19 employment shock, including data on which jobs require people to work in close proximity to other workers or the public.
They conclude that Australia’s unemployment rate will probably rise to about 12 per cent – the highest since the Great Depression in the 1930s.
The Federal Government’s $130 billion JobKeeper wage subsidy will disguise much of the impact of the crisis on employment. Some Australians off work will continue to be regarded as ’employed’ because they will receive pay from their employer via the JobKeeper scheme. And others, especially older workers, will give up looking for work and will therefore not be counted in the unemployment rate.
‘Our governments are rightly spending record amounts trying to cushion Australian workers and businesses from the worst impacts of this unprecedented crisis,’ Mr Coates says. ‘But our paper shows that the economic shock from COVID-19 is going to be so big, and the effects so long-lasting, that more support will be needed.’
