330,000 jobs at risk in retail, building

Consulting firm McKinsey says more than 330,000 retail and construction jobs could disappear by March.

Dave Noonan the national CFMEU secretary pictured in Adelaide at the Grand Hotel, Glenelg. Picture: Roy VanDerVegt

More than 330,000 retail and construction jobs could disappear by March as the federal government winds back its stimulus measures, says consulting firm McKinsey, which anticipates a “second wave” of unemployment almost as large as the first.

Unlike other sectors such as tourism, where the bulk of jobs have already been lost owing to the direct effects of lockdowns and physical distancing restrictions, retail and construction would suffer from “permanent structural changes” and “business cycle shock”.
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In total, between 270,000 and 640,000 jobs could be lost between June and March 2021 — on top of the 740,000 lost up until July — as federal government assistance and with it household income and employment fall away, the firm’s analysts say.

“The sheer size of this shock means the COVID-19 crisis could reverberate through the economy for a decade,” said Simon Kennedy, a senior partner at McKinsey in Sydney. “As generous government stimulus policies are relaxed and the reality of a prolonged recovery sets in, construction is expected to weather a heavy business cycle shock.”

Retail and construction have lost 42,000 and 46,000 jobs over the three months to the end of June, but face total losses up to 215,000 and 205,000 by March next year, the analysis, entitled The Next Normal for Australian Industries, claims.

“As sales shift online, the employment profile of Australia’s retail industry is expected to change permanently, as fewer customer assistants will be required to deliver each dollar of revenue,” Mr Kennedy said.

Dave Noonan, national secretary of the CFMEU, said losses of that size were “consistent with what we’re anticipating”.

“Government needs to consider serious stimulus into construction such as social and affordable housing, where there are massive waiting lists,” he said.

Monthly federal government stimulus, including JobKeeper, JobSeeker and early access to superannuation, peaked at $30bn in July, ahead of expected falls to $23bn this month, $14bn in Nov­ember and $7bn in January before ceasing entirely in May.

Following Victoria’s stage-four lockdown, the government relaxed the eligibility test for JobKeeper, at a cost of $15bn, but signalled it still intended to reduce wage support payments progressively in November and then again in early 2021.

On Sunday, Finance Minister Mathias Cormann left the door open to extend JobKeeper further. “If facts change, we’ll reassess what may or may not be appropriate at the time,” he told the ABC.

State treasurers on Sunday pushed back Scott Morrison’s call for them to bolster their state economic responses to COVID-19.

Spending by the states had reached just 2 per cent of gross state product, a measure of their economic output, compared with ­almost 16 per cent of GDP provided by the federal government.

“We have made every effort to make sure our support and investments complement the nat­ional efforts by the common­wealth, ensuring more people doing it tough get what they need,” said Victorian Treasurer Tim Pallas.

West Australian Treasurer Ben Wyatt said the commonwealth was spending more because it could. while NSW Treasurer Dominic Perrottet conceded that state governments would ultimately have to increase their fiscal support measures.

The professional services, manufacturing and education sectors, which have each lost between 40,000 and 46,000 jobs, faced at least as many job losses again, McKinsey found.