Coronavirus: Grim warning of one in four jobless

Up to 3.4 million people could soon be out of work, but the JobKeeper wage subsidy will obscure much of the impact.

The queue outside Centrelink on the Queensland Gold Coast last week. Picture Glenn Hampson

Up to 3.4 million people could soon be out of work across Australia but the JobKeeper wage subsidy will obscure much of the impact of the unemployment rate rising to between 10 per cent and 15 per cent, new research by the Grattan Institute finds.

Examining the impact on employment from coronavirus restrictions, the authors of a new institute paper released on Sunday suggest two-thirds of jobs in the hospitality industry could be lost while the jobs of many workers in retail trade, education and training, and the arts was at risk.

“We calculate that between 14 and 26 per cent of Australian workers — 1.9 million to 3.4 million people could be out of work in the coming weeks as a direct result of the spatial distancing measures now in place, if they aren’t already,” the institute says.

“Unemployment will rise substantially in the coming months, but the commonwealth government’s new JobKeeper wage subsidy will obscure much of the impact. Nonetheless, we expect the unemployment rate will rise to between 10 and 15 per cent.”

Lower-income workers were twice as likely to lose their jobs than the highest income-earners, while younger people and women were also likely to be hit harder as they were more likely to be employed in occupations and industries most affected by the response to COVID-19.

The employment estimates are based on existing restrictions remaining in place until June 30. “If the level of restrictions is changed, this would obviously affect the number of people who will lose their jobs,’ the paper says.

The authors say that each of their methods yields slightly different results “but all are in broad agreement: somewhere around a fifth to a quarter of workers are likely to be out of work as a result of the COVID-19 policy response”.

“Our preferred method suggests about 26 per cent of workers will be out of work. In February 2020, 13.01 million people in Australia were employed — so 3.43 million Australians could lose work,” they said.

“A shock to employment of this size and speed is unprecedented in Australia. We find, unsurprisingly, that the hospitality industry is likely to be the hardest hit, with more than half of workers in that industry thrown out of work.”

Nearly 40 per cent of hospitality workers are short-term casual workers who will be ineligible for the JobKeeper scheme, while about half the jobs in the ‘arts and recreation services’ industry are expected to be lost.

“Using our preferred method of estimating the job shock, we estimate that about 3.43 million Australians could be out of work as a result of the response to COVID-19,” the authors say.

“If all of these people were classified as ‘unemployed’, the unemployment rate would rise to 30.2 per cent. But not all the people who lose work as a result of COVID-19 will be classed as unemployed.

“Some who lose work will continue to be regarded as ‘employed’, because they will carry on receiving pay from their employer via the JobKeeper program even if they’re not at work. “Others that would have lost their jobs will remain employed, either in adapted roles or on reduced hours since the government is subsidising their wages. Some may quickly find work with another employer. And others will drop out of the labour force entirely, and will therefore not be counted in the unemployment rate.”