How JobKeeper end could lead to small business closures, job losses
Almost half-a-million Australians are set to lose their jobs when the JobKeeper benefit ends. See the industries that are hardest hit.
More than one in two small businesses are still suffering from significant cashflow issues and fears remain many will fold in the coming months after JobKeeper ends.
New independent analysis recently compiled for Small Business Australia analysed the impacts of the pandemic on 600 operators from more than 25 sectors nationally.
The SBA data found nearly all of the nation’s 2.2 million small businesses, many had to either close or change the way they operated because of the pandemic.
It also showed when JobKeeper support is turned off more than 488,000 staff will have to be let go, 224,000 businesses will have to move premises and 192,000 will have to sell their homes or assets.
In addition to this 149,000 businesses will close indefinitely and 98,000 will close permanently.
Small Business Australia’s executive director Bill Lang said there needs to be “dollar for dollar funding” to help businesses get back on their feet.
“This would be where the Commonwealth puts in a dollar and the state puts in a dollar particularly for industries in their state,” he said.
“Different industries have been impacted differently depending on what each state has done.”
Just last week the Federal Government announced a $1.2 billion stimulus package to help surcharge domestic travel but this caused much angst within the tourism and hospitality industries.
There were concerns the package favoured the airlines ahead of these struggling industries.
But latest JobKeeper figures found in the December quarter construction, professional, scientific and technical services and transport, postal and warehousing, tourism and hospitality were among those heavily reliant on the Federal Government support.
At its peak JobKeeper supported more than 3.8 million individuals and about 1 million businesses.
Total JobKeeper payments made so far are about $85.1 billion and it’s estimated by the program’s end it will reach about $90 billion.
Restaurant and Catering Association’s chief executive officer Wes Lambert said of their industry’s 48,700 restaurants, cafes and caterers that were operating pre-pandemic, about 10 per cent of these will permanently go by the end of June.
“We think the businesses that were only hanging on only because of JobKeeper they will likely be the ones that struggle between April 1 until the national borders are reopened,” he said
“Many businesses that were heavily reliant on JobKeeper will close after April 1 as landlord protections and JobKeeper expires.”
Already about 6500 businesses have closed and another 3500 are expected to close in the next three months.
Mr Lambert also said CBDs around the country remain the hardest hit.
The Tourism and Transport Forum has also called for a dedicated wage subsidy until international travel resumes with no date set down yet.
The industry has estimated more than 300,000 job losses this year and this comes after 506,000 full-time positions were lost in 2020 because of the COVID-19 pandemic.
The Australian Hotels Association’s chief executive officer Stephen Ferguson said once JobKeeper ends businesses within the industry are “on their own”.
“Already we are starting to see redundancies across the sector and we don’t know where it’ll end up,” he said.
“There are many businesses out there only operating at 30 per cent revenue that are only able to keep staff on because of JobKeeper.”
ENDING OF JOBKEEPER ‘A SCARY THOUGHT’
Joshua Susskind says government support is crucial for businesses still impacted by the closure of Australia’s international borders.
The founder and CEO of online travel booking and concierge service TheR8.com said his business spent much of the past year helping clients claim refunds for international travel bookings, and now wants more clarity about support for struggling business owners.
“JobKeeper has allowed us to keep our employees, which in a small to medium sized business like ours are the backbone of the organisation,” Mr Susskind said.
“The ending of JobKeeper is a scary thought. While we’re optimistic about the direction that we’re currently travelling, the reality is the international borders are not currently open and might not be until 2022.”
To stay agile, TheR8.com brought in managing director Jonathan Midghall to streamline operations and reduce costs, and had introduced a new product focused on holiday home rentals, Mr Susskind said.
BORDER CLOSURES MAKE STAFFING IMPOSSIBLE
Restaurateur Joe Mammone said the domestic and international border closures have made it extremely difficult to find staff and fears this will continue when JobKeeper stops.
The 45-year-old runs four venues in Melbourne including Il Bacaro in the CBD and said he has at least 20 positions – both casual and full-time he cannot fill.
“With the border closures both internationally and domestically a lot of people have gone grape grazing or gone to farms,” Mr Mammone said.
“We have a shortage of hospitality staff and there’s that many restaurants around us that haven’t been able to open because the numbers don’t stack up with restrictions.”
Eateries must abide by the 1 person per 2sq m rule.
Mr Mammone’s staff at Il Bacaro are still on JobKeeper and he hopes when the payments stop at the end of the month the open and closing of borders stops.
“We can’t just flick on a switch and find staff,” he said.
“I can’t see why there’s international hospitality staff who can’t get into the country, there should be a quarantine process for them.”
‘WARY OF WHEN BUBBLE WILL BURST’
Maya Mexican owner Katie Coats says JobKeeper helped her business survive the pandemic but the biggest challenge ahead is finding good workers.
The popular Mexican venue in Brisbane’s Fortitude Valley had to change its focus during the pandemic – instead of being a bar it had to pivot more towards offering food services.
Ms Coats said with JobKeeper ending it could be “delaying the inevitable for many businesses”.
They relied on the Federal Government payments until September and are now close to returning to pre-COVID trading levels.
“I’m wary of when the bubble will burst,” Ms Coats said.
“In hospitality we rely so heavily on our students and working holiday visas and the ability for our industry to survive staffing shortages is going to be so challenging over the next 24 months.
“Working holiday visas are such a lifeline for us and without them or student visas it will be a very interesting few years.”
JOBKEEPER ‘GAVE US FINANCIAL SECURITY’
Travel agent Amanda Cengarle says JobKeeper helped give her financial security “during a very anxious time”, and its end this month has left her worried about other tourism operators more than herself.
“My main concern lies with our smaller travel and tourism friends who might not be able to continue to survive without further assistance,” said the customer success manager at Corporate Traveller SA.
Ms Cengarle said she was grateful that her business, the corporate arm of Flight Centre, was now seeing strong numbers as business travel recovered.
“JobKeeper has been the lifeline of the travel industry for the last year, we’ve seen so many businesses pivot into new offerings, but this alone isn’t enough to save many businesses,” she said.
The Federal Government’s new $1.2 billion program offering half-price fares to 13 Australian regional tourism destinations only focused on Kangaroo Island in South Australia.
“I am concerned for the travel and tourism industry in general, not so much for myself,” Ms Cengarle said.
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