Coronavirus: Wage subsidy key to keeping workers on the books

More than 40pc of businesses say JobKeeper influenced their decision to keep staff, as new data shows a collapse in job ads.

A new survey shows how JobKeeper played a role in companies keeping on staff, rather than them having to join Centrelink queues. Picture: AAP

The government’s massive JobKeeper program has influenced four in ten businesses to hold on to staff, even as separate data showed job advertisements collapsed by 50 per cent in April to their lowest level in over two decades.

The Australian Bureau of Statistics’ special survey on the impact of the COVID-19 crisis on corporate Australia, conducted over the week commencing April 22, also revealed that three in five companies had already enrolled, or intended to enrol, in the $1500 a fortnight wage subsidy program.

The results add credence to Treasury estimates that the $130bn JobKeeper program will contain the spike in the unemployment rate in the coming months, limiting the peak to 10 per cent rather than the 15 per cent which would have been expected without the program.

Employing businesses and sole traders which have suffered a sharp decline in turnover as a result of the pandemic will begin to receive payments in coming days, with government figures showing there have been more than 650,000 JobKeeper enrolments.

The shockingly swift blow to the labour market flowing from the partial lockdown of the economy to fight the spread of the coronavirus was highlighted by a 53 per cent collapse in job advertisements in April, according to ANZ figures – the lowest level since online job ads were added to the series in 1999.

The monthly drop was five times larger than the previous record monthly fall, recorded during the GFC.

ANZ senior economist Catherine Birch said the job ads result “added to the evidence that the downturn in activity is impacting businesses and the labour market at an unprecedented speed”.

The bank expects the unemployment rate to reach 9.5 per cent this quarter, and for the jobless measure to still be at an elevated 7 per cent by the end of the year.

Ms Birch also said, however, that the ABS figures provided encouragement that the JobKeeper program was working as intended – to enable employees to stay connected to employers and hasten the forecast rebound once the spread of the virus has been contained and restrictions are eased.

 

The JobKeeper program has had a bigger impact on the small and medium business sector, the ABS survey showed, where 45 per cent said it had influenced their decision to continue to employ staff, versus 32 per cent of large firms.

Among small businesses which said they have not applied for the scheme, 8 per cent blamed “insufficient cashflow” for their decision.

Ms Birch described this proportion as “reasonably low”.

“Given a lot of reports in the media around certain businesses struggling in this regard, I thought it could have been higher.”

Two-thirds of businesses operating in the devastated food and accommodation sector said JobKeeper had made the difference between keeping or shedding workers, as well as 60 per cent of surveyed construction firms and 40 per cent of retail trade businesses.

By industry, registration is lowest amongst financial services firms, at 19 per cent, mining (17 per cent) and utilities (13 per cent) – all industries which have proved resilient to the pandemic.

Treasury expects 6 million workers will eventually receive the wage subsidy, but Westpac senior analyst Andrew Hanlan said the ABS survey – and especially the lower take-up by big businesses – suggested there will be fewer covered by the scheme.