Coronavirus: Cafe and pub closures risk $10bn wages wipeout

Closure of non-essential services, including pubs, cafes, gyms, cinemas, casinos, amusement parks and zoos, could erase $10bn in workers’ wages.

Cairns’ Smith St Cafe customers don't need to leave their cars. Picture: Brendan Radke

The mandated shutdown of non-essential industries such as cafes, pubs and casinos directly threatens the livelihoods of 300,000 Australians employed across tens of thousands of businesses.

As long lines formed outside Centrelink centres across the country, analysis of exclusive IBISWorld data by The Australian shows the closure of non-essential services, including pubs, cafes, gyms, cinemas, casinos, amusement parks and zoos, could erase $10bn in workers’ wages.

The data showed cafes alone employ nearly 150,000 people ­nationwide while pubs and nightclubs employ close to 80,000.

Casinos employ 30,000 people while there are 22,000 working in gyms and fitness centres, and a further 12,000 employees of zoos and amusement parks.

All now face losing their jobs as state and territory governments move to close industries considered non-essential as authorities race to contain the coronavirus.

On Monday, Crown Resorts announced it would cease all gaming activities, restaurants and conference centres across its Mel­bourne and Perth casinos, with its hotels operating at reduced cap­acity. On Monday, Tasmanian ­casino operator Federal Group ­announced it would stand down 1800 staff.

Federal Group chief executive Greg Farrell told staff the company had “no other option than considering standing down almost all of us, and in the case of casuals we will not have shifts”.

Australian Hotels Association chief executive Stephen Ferguson said the mandated closure of pubs in NSW, Victoria and ACT was a “sad day” for the country.

“Obviously this closure comes at a huge financial cost — many ongoing bills will still need to be paid by mum-and-dad operators while the pub is not able to trade and have any income,” he said.

As parliament met on Monday, potentially for the last time for months, to rush through legislation related to the government’s two stimulus packages, Scott Morrison said “across Australia, many thousands of Australians will lose their jobs”.

“They are lining up at Centrelink offices as we speak — something unimaginable at this scale, only weeks ago. They have lost their jobs. And many more will,” the Prime Minister said.

Economists and policymakers are struggling to get to grips with the economic fallout of the worst global health crisis in 100 years.

Australian Bureau of Statistics chief economist Bruce Hockman said there was nothing like it in the history of quarterly GDP data gathering going back to 1959. “It’s unprecedented in scale, and what you predict today you might regret by the end of the week,” he said. The rapid rise in the unemployment rate, in particular, looks likely to eclipse recent recessions.

ANZ senior economist Catherine Birch said her team’s recent forecast of a lift in the national unemployment rate to 8 per cent by the end of the year was already “out of date … That scenario was predicated on a partial shutdown of the economy over a matter of weeks rather than months”.

“That has obviously changed. The current situation of longer and wider-spread disruptions will result in a deeper drop in activity and a larger rise in unemployment,” Ms Birch said.

Analysts continued to update economic forecasts as they factored in the rapid spread of the virus and associated costs of measures aimed at containing transmission. S&P Global Ratings now expects $US620bn ($1.08 trillion) of permanent income loss across the Asia-Pacific region, and that Australia’s economy will grow by just 0.4 per cent in 2020 after a recession in the first half of the year.