50,000 jobs lost as virus cuts through economy

Up to 50,000 jobs have been axed or earmarked for cuts across corporate Australia in just days as the coronavirus hits the economy.

Chadstone Shopping Centre was nearly deserted on Wednesday. Picture: Tony Gough

Up to 50,000 jobs have been axed or earmarked for cuts across corporate Australia in just days as the coronavirus hits the economy.

The $325bn retail sector, Australia’s second largest employer, is grinding to a halt with restrictions on social gatherings and strip shopping closing down.

In just a few days, as retailers, clubs, pubs and hotels shut their doors more than 17,000 workers have been stood down or have been warned that their jobs are about to disappear with no sign of when they will return.

Beleaguered airline Virgin became the latest example on Wednesday, standing down some 8000 staff after grounding 90 per cent of its fleet.

Elsewhere casino operator Star Entertainment has stood down the majority of its 9000 staff, including senior management, after closing its gaming floor, food and beverage and conference facilities at its Sydney, Gold Coast and Brisbane properties.

This week The Australian revealed that Crown Casino was in talks with unions, with a “significant” number of jobs at its Melbourne and Perth casinos expected to be lost.

Earlier this week Justin Hemmes’ Merivale, which has more than 70 venues across Sydney, said most of its 800 staff were expected to be impacted.

Last week Qantas and its Jetstar offshoot said that some 20,000 staff would be stood down until at least May.

Some retailers yet to close their doors are now mulling their options, as shopping centres turn into wastelands following government calls for people to stay home.

The operator of Westfield shopping malls in Australia, Scentre, on Wednesday said that while supermarkets, grocery stores, food markets, pharmacies and medical centres would remain open at its malls, cinemas, gyms, indoor sporting venues and entertainment venues would close.

“Our food court retailers are permitted to operate takeaway for our customers,” a Scentre spokeswoman said.

“However, food court seating areas are now closed.”

The quick demise of the retail sector means the 1.3 million people it employs — the second biggest source of jobs behind healthcare — now look to be faced with months of unemployment and a greatly diminished ability to spend that will only serve to undercut other industries and jobs.

The Australian yesterday visited Chadstone shopping centre, the biggest of its kind in the southern hemisphere, to find shops and malls were virtually deserted, save for mostly masked retail staff and cleaners.

Apple was closed, along with myriad other retailers including Adidas, Under Armour, Forever New, Kate Spade and Ozmosis.

Signs were stuck to those shops still trading, restricting the number of shoppers allowed inside — but this was not necessary given that most stores were completely empty.

Department store Myer didn’t even bother turning on all the lights as staff gathered to kill time chatting — mostly at a safe distance. The once-iconic Myer is now worth just $90m on the sharemarket.

In Chadstone’s food courts fixed seating was cordoned off and other chairs packed away, with stickers on tables informing potential customers that takeaway was their only option.

Just a fraction of food vendors had bothered to open.

This week Westpac economists warned that jobs were being shed at an alarming rate and this could accelerate, causing Australia’s unemployment rate to more than double to 11 per cent by the end of the year.

Pubs and hotels business ALH, jointly owned by Woolworths and the Mathieson family, has asked 8000 workers to stand down.

Jeweller Michael Hill International has decided to close its national network of stores, sending more than 2500 workers home, and on Wednesday fashion retailer Mosaic Brands, whose chains include Noni B, Millers and Katies, closed its doors, threatening 6800 staff.

In New Zealand Wesfarmers has closed 25 Kmart stores as it follows new directives from the government and will only allow tradies to shop at its 53 Bunnings stores in the country.

Bunnings is one of the biggest private sector employers in Australia with more than 40,000 staff.

If it is closed in a ratcheting up of quarantine laws then an avalanche of people without jobs will swamp the welfare system.

Perth-based conglomerate Wesfarmers has closed its Kmarts and partially closed its Bunnings stores in New Zealand to comply with new government directives on limiting social interaction in the wake of the coronavirus pandemic.

“At this stage, state and federal government measures in Australia do not require the closure of retail stores,” Wesfarmers said in a statement.

“Bunnings, Kmart, Target and Officeworks stores across Australia are operating under standard or near-standard trading hours and operations continue in the group’s industrial businesses.”

Yarra Capital Management managing director Dion Hershan has warned the economy is very finely tuned and a hard stop like we were currently experiencing would lead to unprecedented job losses.

“The pace of the downturn and the speed at which companies have responded so far is beyond belief.

“Very few companies can withstand demand hitting an air-pocket for 3-6 months,’’ Mr Hershan told The Australian.

“We will see a large step down in activity levels (GDP) and employment. It’s difficult to time but as COVID-19 comes under control, restrictions will be relaxed and activity will rebound, but will probably remain at recessionary levels. As such employment will snap back but remain well below the prior peak. “

The downturn would not only see higher unemployment but also a fall in investment and dividends to shareholders.

“Many companies are now in self-preservation mode,” he said. “Shedding costs and standing down staff is unfortunately necessary to ensure adequate liquidity and the support of lenders. As with the GFC, we expect to see dividend cuts and capital raisings as some of the weaker businesses shore up their position.”

Westpac chief economist Bill Evans has forecast the unemployment rate could exceed 11 per cent by the June quarter.

“Last week we forecast a peak in the unemployment rate of 7 per cent. Since then we have seen the rollout of more extensive shutdowns than we had originally envisaged. Economic disruptions are set to be larger as the government moves to address the enormous health challenge which the nation now faces.

“We estimate that there will be 814,000 in job losses in the June quarter, lifting the unemployment rate to 11.1 per cent. Working through our GDP estimates on an industry basis and acknowledging that output is not always aligned with employment this approach points to a contraction in GDP of 3.5 per cent in the June quarter.”

with Christine Lacy