150,000 Australian’s jobs at risk when JobKeeper ends: Treasury

About 150,000 jobs could be lost as Australia’s economy begins to enter a worrying period of recovery from the coronavirus pandemic.

Growth will moderate as Australia moves past the initial phase of the recovery from COVID-19, the Treasury boss says.

Treasury secretary Dr Steven Kennedy has told Senate estimates the economy has now recovered 85 per cent of the decline from its pre-COVID level of output.

But the nation will need to stay mindful of continued risks ahead, including the chance of more coronavirus outbreaks and ongoing trade and geopolitical tensions.

The winding up of JobKeeper on Sunday also means 100,000 to 150,000 JobKeeper recipients could lose employment once the program ends, Treasury predicts.

“While the economy is recovering strongly, well supported by fiscal and monetary policy settings, we are well below our pre‑pandemic trend economic growth path, and it will take some time to fully recover,” Dr Kennedy told Wednesday’s hearing.

Dr Kennedy said the labour market had outperformed expectations, with strong results in recent months.

The unemployment rate fell to 5.8 per cent in February, with the participation rate remaining at its record high of 66.1 per cent.

The job market has outperformed expectations, Treasury boss Dr Steven Kennedy says. Picture: AAP

While overall employment has recovered to just above its March 2020 level, youth employment remains well below its pre‑pandemic level. Employment for those aged 15‑24 is still 3.8 percent lower.

Dr Kennedy said different sectors would be monitored to see the impact of the end of JobKeeper, which would lead to some businesses closing and jobs being lost.

“Determining the overall level of potential job losses is difficult,” he said.

“We believe that in the order of 100,000 to 150,000 JobKeeper recipients may lose employment at the completion of the program, though there is a wide band of uncertainty around this estimate.

“We remain confident that there will continue to be a broad-based recovery in the labour market over 2021, given recent strong employment growth and the decreasing reliance on JobKeeper over recent months.”

Treasury says the economy will take some time to recover from the pandemic. Photo: NCA NewsWire / Jeremy Piper

In its first phase from March to September 2020, more than 3.8 million Australians were supported by JobKeeper.

This fell to 1.6 million individuals at the start of the second phase in September.

Treasury now estimates about 1.1 million Aussies will get JobKeeper in the March quarter - lower than the 1.3 million predicted in its mid year economic and fiscal outlook unveiled in December.

About 110,000 businesses receiving the payment in the March quarter suffered a fall in turnover of over 75 per cent in the December quarter, compared to the year before.

Some of these businesses were still being impacted by the Victorian shutdown, as well as border closures and stricter social distancing rules, which are no longer in place.

Dr Kennedy said while the adjustment away from JobKeeper would be “manageable” and employment would continue to rise this year, there could be a small rise in the jobless rate in coming months before it goes down again.

Originally published as 150,000 Australian’s jobs at risk when JobKeeper ends: Treasury