Australia’s unemployment rate: State virus border closures hurting jobs

Treasurer Josh Frydenberg is digging in over plans to slash the value of JobKeeper despite his prediction real unemployment was at 13 per cent.

Treasurer Josh Frydenberg is digging in over plans to slash the value of JobKeeper despite his own prediction that the ‘real’ rate of unemployment is set to hit 13 per cent.

Australia’s ‘real’ unemployment rate is set to soar as state borders remain closed and Victoria emerges from a second lockdown according to new Treasury figures.

But Mr Frydenberg told the Today show on Monday that did not mean it was time to reconsider the plan to slash the value of JobKeeper payments.

“Well, extended and expanded JobKeeper to go for an extra six months,’’ he said.

“It was originally legislated for just six months. At that flat $1500 payment. What we’ve done is extend it for another six months out to the end of March. Now, it will transition from $1500 down to $1200 and then down to $1000 and there will be two different payments based on the number of hours worked.

“Certainly the situation in Victoria with stage four restrictions is very different. And it’s Treasury’s analysis that up to 400,000 people in Victoria will either lose their job or see their hours reduced down to zero.”

The Australian Council of Social Service is calling on the Morrison Government to reconsider the decision to slash the payments.

CEO Cassandra Goldie said workers who lost their jobs through no fault of their own as a result of COVID-19 lockdowns were being put in an impossible position.

“Instead of cutting $300 per fortnight from millions of people’s already sparse incomes next month, we need parliament to put in place a permanent, adequate Jobseeker rate, which before the temporary Covid increase, [had] not been increased in over 25 years,’’ she said.

“There are 2.3 million people facing the $300 per fortnight cut on September 25 unless parliament acts in these two weeks. Troublingly, more than 1.1 million children are living in households that stand to have their incomes cut on 25 September.

“People are in an impossible situation and we’re hearing from many who are only just able to cover the basics now with the current Jobseeker rate and are worried about how they will pay for housing, food, and the costs of their children.

But there is also a ray of hope in the Treasury analysis: some states are bouncing back with the new figures revealing 689,000 people have gained jobs or returned to work after being stood down from their jobs since April.

“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,’’ Mr Frydenberg told news.com.au.

“Treasury estimates show that nearly 700,000 people have gained effective employment since April recovering more than half of the jobs lost or those who were stood down on zero hours at the start of the crisis.

“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.”

Queensland, which is heavily reliant on tourism, is among the hardest hit amid speculation the borders will remain closed until after the October 31 election.

While the official unemployment rate in Australia is 7.4 per cent, the Prime Minister and Treasurer concede this underestimates the number of Australians stood down during the lockdown and those who have lost hours.

As a result, the figures in the Treasury’s analysis have tried to paint a more accurate picture of the true unemployment rate in state by state breakdowns.

The highest ‘real’ or effective unemployment rates in the country were in the Northern Territory (12.1 per cent), Queensland (11.4 per cent) and Victoria (10.5 per cent).

The Treasury figures also confirm that nearly one in ten Australian workers are now unemployed, with the effective unemployment rate down to 9.9 per cent after a peak of 14.9 per cent in April. But it’s set to climb back up to 13 per cent.

The last time the official unemployment rate in Australia hit double digits was in April, 1994.

Treasurer Josh Frydenberg in a face mask at Parliament House. Picture: Gary Ramage

JOBKEEPER CHANGES LIKELY TO IMPACT UNEMPLOYMENT

As MPs return to Canberra for the first time in months wearing masks to protect against the spread of COVID-19, the first item on the agenda is the revamped JobKeeper allowance which will be offered at a reduced rate after September 27.

Under the legislation, the wage subsidy will be reduced from $1500 a fortnight to $1200 and from October, the payment for people working part-time will have the payment slashed from $1500 a fortnight to $750.

The turnover test to qualify for the payments will also be changed in a move that is likely to make thousands of companies ineligible.

Last month, the Treasurer confirmed the changes would slash the number of Australians on the $1500 a fortnight wage subsidy by 2 million workers.

However, further changes the Morrison Government announced to help more businesses impacted by the Victorian shutdown will substantially reduce that figure allowing more companies to claim the handout.

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People queue outside a Centrelink. Picture: John Grainger

Labor MPs have called on the Morrison Government to consider not reducing the JobKeeper and JobSeeker payments given the dire economic situation in Victoria.

But asked whether he will consider leaving the payments at the current rate, Finance Minister Mathias Cormann said that was not the plan.

“These are the settings that we are proposing to the Parliament,’’ he said on Sunday.

“We need to transition out of this historically unprecedented crisis level support in an appropriate period.

“The appropriate period that we are proposing is for JobKeeper to the end of March. That is another six months beyond the original timetable. At some point we need to get back into a situation where viable, profitable businesses pay for the wages of their employees out of their income rather than on the basis of taxpayer’s support.”

STATE BY STATE BREAKDOWN REVEALS BORDER CLOSURES ARE HURTING QUEENSLAND

According to the Treasury figures, the second wave of COVID-19 cases in Victoria has bumped up the effective unemployment rate in Australia from 9.5 per cent to 9.9 per cent currently.

Across Australia, the lowest unemployment rate is in the nation’s capital where the ACT recorded an effective unemployment rate of 5.2 per cent.

The highest unemployment rates in the country were in the Northern Territory (12.1 per cent), Queensland (11.4 per cent) and Victoria (10.5 per cent).

South Australia and Western Australia are both measured at 9.8 per cent with NSW at 8.5 per cent.

The number of people receiving unemployment benefits is around 3 per cent across Australia.

But it’s higher in Victoria where 3.8 per cent of workers are now relying on JobSeeker to survive.

Surprisingly, the number of people on unemployment benefits has fallen by 22,800 people in the latest figures despite an increase in 14,900 Victorians on the dole as a result of the second lockdown.

In Victoria, around 149,000 people have returned to work compared to March.

Around one in five Victorians previously stood down on zero hours had returned to work in the lead up to the second lockdown.

There were 340,000 new jobs created in the last two months alone.

However, when the Treasury took into account those employed but working zero hours under shutdowns, it was estimated that the increase in effective employment has been even greater with 689,000 additional people back to work since April.