Strong labour market ‘will shield the economy’, says Westpac’s Peter King

A strong labour market will likely shield the economy from any major disruption caused by the end of JobKeeper, according to Westpac chief Peter King.

Westpac CEO Peter King says the customer support centre is the bank’s biggest growth area because of the number of people needing help. Picture: Jonathan Ng

A strong labour market and better than expected economic growth will likely shield the economy from any major disruption caused by the end of JobKeeper, according to Westpac chief Peter King.

With the JobKeeper program ending last weekend, the country’s second largest bank has maintained a bullish outlook on the economy and its own ability to weather the expected storm.

While Westpac economists estimate that up to 140,000 employees could lose their jobs as payments from the $90 billion scheme comes to an end, Mr King expects many will find alternative employment in a surging jobs market.

“From the economy’s perspective there’s actually a lot of underlying momentum in the economy,” he said.

“If you look at employment we’re now back at 13 million people employed, which was the same number pre-COVID. So there’s good momentum, the averages are good if you like, but we’re going to have a step down.

“The banks are there to help, the government’s going to target assistance from now and not have broad assistance — you’ve seen that with tourism — I think there’s ons and offs. And so the question becomes how long will it last, and that’s why getting rid of social distancing’s quite important because the smaller that gap the better it will be,” Mr King said.

Westpac recently revised up its economic growth forecast for 2021 to 4.5 per cent, on the back of low interest rates, infrastructure spending, the upturn in the housing market, the vaccine rollout and solid spending by consumers.

It expects unemployment to hold steady at around 6 per cent by the end of the year.

The improved economic outlook and quality of the bank’s credit helped it pump up cash earnings with a $635m write-back of impairment charges in its first quarter of the financial year.

Mr King said the bank was well placed to weather any challenges posed by the end of JobKeeper as well as the expiration of commercial tenancy relief measures implemented by several states.

“I think we’re in a great position – to me this is manageable and we’re ready for whatever gets thrown up,” he said.

“We provided for a lot last year, and conditions are much better — the economic outcomes are probably better than most economic forecasts had as their top case. Most things are above the top for a lot of the economic forecasts.”

Mr King was speaking during a visit to Adelaide, where the bank has employed more than 1500 staff in the past 16 months, with many brought on to support customers throughout COVID-19.

Westpac has provided close to $55bn worth of mortgage and small business repayment deferrals to customers since the onset of the pandemic.

“We have a big team of people who provide on the phone service to all our brands and we have the people who help people when they’re in trouble — so hardship teams and specialist hardship teams,” he said at the company’s customer support centre in Bedford Park, in Adelaide’s south.

“They’re probably the biggest growth area that we have had this year because of the number of people needing help.

“Our South Australian workforce was at the heart of helping with our customer response to the pandemic and supported us processing 229,000 COVID-19 support packages for households and small businesses across Australia.”

Mr King said many of the bank’s new staff members had transitioned from industries hardest hit by COVID-19, including travel, tourism and hospitality.

Last July, Westpac announced it would bring back to Australia around 1000 customer support jobs from overseas following disruptions to offshore call centres and processing facilities caused by the pandemic.