Covid-19 vaccination a key step for economic victory

Treasurer Josh Frydenberg on Wednesday. Picture: Martin Ollman

In the bleak midwinter it’s easy to forget how well placed Australia is in recovery, despite fortress-like border settings and its largest conurbation in lockdown.

The OECD’s annual stocktake of employment documents Covid-19’s labour market carnage, with most of the rich world mired in mass unemployment and struggling to recapture lost ground. The scarring to the most vulnerable workers, in low-paid and insecure jobs even in good times, is already immense and the effects will linger.

What’s clear is Canberra’s near $300bn spending on direct support to workers and businesses has bankrolled the spectacular employment recovery. We are years ahead of our peers, having surged past the pre-pandemic number of jobs in May.

The Morrison government’s JobKeeper scheme, cobbled together in extremis, hit the sweet spot. The wage subsidy that ended in March, amid foreboding of an unemployment cliff, was not as generous as it was in other countries.

But the initial $1500 a fortnight program covered 30.5 per cent of the workforce, which was 50 per cent more coverage than the OECD average.

JobKeeper tied employees to their employers through the worst of the induced economic coma that saw national output slump by 7 per cent in the June quarter last year.

With Greater Sydney in lockdown for another week, there will be renewed pressure on service industries, school students and their parents, and possibly job losses.

Still, the omens for further job gains are good, despite the sporadic restrictions. Forecasters are bringing down their baseline scenarios for the jobless rate. Perhaps we’ll see it in the “4-somethings” by year’s end.

In resetting monetary policy on Tuesday, RBA chief Philip Lowe emphasised “we are in a much better position than we thought we would be in”.

“The Australian economy has bounced back earlier and stronger than expected. More Australians have jobs today than they did before the pandemic. This is good news,” he said.

Of course, securing the expansion depends on getting a few other things right in politics and health policy. Vaccination is the missing V in claiming a Covid victory.