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Half a million go on the dole, jobless rate could remain high for years
By Shane Wright
Half a million Australians took up unemployment benefits in the six weeks after the coronavirus forced key parts of the economy to shut, and economists warn it could take years for some of them to get another job.
In a sign the national jobless rate will spiral towards double digits, the Department of Social Services revealed the number of people on JobSeeker jumped from fewer than 800,000 on March 20 to 1.2 million on April 24.
The number of young Australians on youth allowance also surged, reaching 121,600 in late April, compared to 85,000 a month earlier.
There are another 300,000 claims to be processed, taking the total number of Australians on some sort of unemployment support to more than 1.6 million by late April.
The jobless rate for March was 5.2 per cent but the JobSeeker data suggests it could breach 9 per cent in April. Treasury has forecast it to peak at 10 per cent by June.
The department's acting deputy secretary, Shane Bennett, said up to 1.7 million people were expected to be on an unemployment payment by September. But that forecast did not take into account the Morrison government's $130 billion JobKeeper package, which it is hoped will enable workers to keep their jobs.
The sharp drop in the number of people holding down a job is feeding into broader financial pressures, with the ANZ revealing 105,000 of its mortgage customers had sought to defer their repayments since March 20. Another 17,000 commercial customers had requested a delay on their loans.
The bank's baseline forecast is for the Australian economy to contract by 13 per cent in the June quarter. Through the full year, it expects the economy to shrink by 4.7 per cent, before expanding by 4.1 per cent in 2021.
Unemployment is expected to peak at 13 per cent in the June quarter and average 9 per cent this year before edging down but elevated at 7.1 per cent through next year.
ANZ chief executive Shayne Elliott warned the surge in jobless numbers would weigh on the economy for years.
"Even with the economy opening in the coming months, it could take three to five years for employment to fully recover," he said.
"As a result, a lot will change for the long term – consumer behaviour, attitudes to risk, usage of technology, management of supply chains and ways of working."
While overall unemployment is expected to continue to rise, some sectors are putting on staff, with Woolworths revealing on Thursday it had employed 22,000 additional workers to deal with the surge in custom through March.
In the week ending March 22, sales through the supermarket giant soared by 40 per cent due to shopper "pantry-loading".
People have increased the number of items in their baskets by 6.2 per cent as they seek to avoid heading to the shops. Woolworths also notes activity has increased in its suburban stores but its Metro outlets have suffered due to a sharp fall in CBD foot traffic.
Separate data collected by NAB from transactions through its business clients shows a broad-based collapse in spending across the country over the past month that is accelerating.
It found spending so far this year was down most in Victoria, by 23 per cent, while in NSW it is down by 20.4 per cent.
There is no spending in the motion picture sector, with cinemas shut, while administration support, accommodation, food services and transport are all suffering huge falls of between 27 per cent and 67 per cent through the year.