Job losses in Victoria intensify as Melbourne restrictions, border closures bite

Victoria’s second wave of job losses intensified over the two weeks to early August, inflicting further damage on the national recovery.

Victoria’s second wave of coronavirus cases and associated shutdowns have weighed on the jobs recovery.

The costs of Victoria’s second wave of coronavirus cases are mounting, as payroll figures show job losses intensified over the two weeks into early August and new NAB forecasts suggest the state’s economy will shrink by more than 9 per cent this fin­ancial year.

The data came as Josh Frydenberg on Tuesday warned that 400,000 Victorians would end up “effectively unemployed” as they either lost their jobs or had their hours reduced to zero as a result of intensified restrictions.

The number of Victorian jobs in the tax office’s single-touch payroll system dropped by 1.6 per cent between July 25 and August 8, against a 1.5 per cent fall in the previous fortnight, the Australian Bureau of Statistics revealed. That brought the loss of jobs over the month to 2.8 per cent.

Nationally, there were 0.8 per cent fewer roles against a 0.1 per cent decline in the previous ABS report.

The jump in new cases in July, which triggered the reintroduction of progressively severe restrictions, culminating in a stage-four lockdown in Melbourne from August 2, has devastated Victoria’s recovery from the national shutdown earlier this year.

About 39 per cent of the jobs lost in Victoria by mid-April had been regained by 27 June, but by early August this labour market rebound had been whittled down to 12 per cent of those earlier losses, ABS head of labour statistics Bjorn Jarvis said.

NAB senior economist Tony Kelly said the current Victorian shutdowns had led to a “significant downgrading” of the bank’s outlook for the state. He said the new restrictions would lead to a 15 per cent collapse in economic activity in Victoria over the September quarter, which would slash about three percentage points off national GDP.

Victoria’s gross state output would collapse by 9.2 per cent over the 2020-21 financial year, Mr Kelly said, against a national contraction of 3.5 per cent.

“No state (or) territory is immune from the fallout of COVID-19,” he said.

In this financial year, the NSW and ACT economies would contract by 2.7 per cent and 2.6 per cent, respectively, while Queensland and Western Australia would suffer the mildest hit, with GSP in those states predicted to drop by 0.8 per cent over the 12 months to June 2021.

The ABS payrolls data showed job losses across most states and territories over the two weeks to August 8, with Queensland suffering a 0.9 per cent fall after the Sunshine State on August 1 closed its border to millions of Australians from greater Sydney and Victoria.

NSW payroll jobs dropped 0.4 per cent between August 8 and July 25, the ABS said.

Citi chief economist Josh Williamson said “we suspect the Victorian lockdown is starting to drag on other states via negative confidence effects, but also (due to) the decision of other state governments to extend border closures to interstate visitors”.

In contrast, Tasmanian and Northern Territory payroll jobs lifted by 0.2 per cent and 0.3 per cent respectively, while the ACT suffered a 1.5 per cent loss.

Between the week ending March 14 — when the country recorded its 100th confirmed coronavirus case — and August 8, payroll jobs fell by 4.9 per cent, which is equivalent to about 520,000 roles, according to the ABS estimation.