450,000 Australians to lose their jobs before October as unemployment soars
The economic cost of a second Victorian shutdown is expected to send shockwaves through the nation’s economy, with more than 450,000 Australians tipped to lose their jobs by October.
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Victoria’s deadly second wave and tough state border restrictions are putting the nation’s economic recovery in jeopardy, with 450,000 more Australians predicted to lose their jobs before October.
Treasury modelling shows most of those job losses would be in Victoria, where harsh stage four restrictions had crippled the economy.
Last month, nearly half of all Australian who were employed but working zero hours for economic reasons were from Victoria – up from 30 per cent in April.
Josh Frydenberg said the Victorian outbreak had showed how fragile recovery would be and pointed to tight state border controls as another handbrake on the economy.
“We know the road to recovery will be bumpy as we have seen with the setback in Victoria, however, the jobs recovery across the rest of the country gives cause for optimism that through containing the spread of the virus and reopening the economy we will get through this,” the Treasurer said.
“There is still a long way to go through this crisis and high frequency data is showing signs that the jobs recovery may be slowing as state border closures have been tightened.”
The labour market will further deteriorate over the next few months, with the effective unemployment rate expected to increase to above 13 per cent in September, according to Treasury.
Victoria currently has an effective unemployment rate of 10.5 per cent – higher than almost every other jurisdiction.
A report by Deloitte being released on Monday found Victoria had already been the worst performing state in terms of labour market pain and the second wave would “likely to cement that spot for the state for the near future”.
Researchers found national consumer sentiment had almost returned to pre-pandemic lockdown levels in June but then nosedived as cases rose in Melbourne.
“The biggest risk to this economic recovery path is the latest outbreak in Victoria,” the report read.
“Not only has this resulted in tighter restrictions, it has rocked confidence and there are fears labour market gains will be lost in coming months.”
Victoria’s bottom line was also expected to take a further hit from unemployment, with advice from Parliamentary Budget Officer Anthony Close predicting a significant drop in payroll tax.
Payroll taxes revenue was likely to decline with the refunding of 2019-20 payroll taxes for businesses with a wages bill of less than $3 million and the broader impacts of the pandemic on employment and wages.
The Reserve Bank of Australia Philip Lowe and Treasury Secretary Steven Kennedy addressed the national cabinet on Friday, telling the nation’s leaders jobs and unemployment were the most significant hurdles moving forward.
Prime Minister Scott Morrison said the “biggest challenge” shared by all governments was unemployment.
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