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Job losses worse since depression despite government stimulus
Up to 26 per cent of Australia’s workforce will be unemployed due to the COVID-19 outbreak, surpassing the total percentage of job losses during the Great Depression, a thinktank has found.
Job losses worse since depression despite government stimulus
Up to 26 per cent of Australia’s workforce will be unemployed due to the COVID-19 outbreak, surpassing the total percentage of job losses during the Great Depression, a thinktank has found.
The Grattan Institute’s Shutdown: Estimating the COVID-19 employment shock has found that between 1.9 and 3.4 million Aussies will lose their jobs in the current weeks if they haven’t already, with the financial impact draining the economy for years to come.
Grattan Institute Household Finances Program director Brendan Coates believes if the estimates are close to correct, Australia is facing its worst employment challenge in history.
Warning of the dangers of a “second wave” hit to the economy even after the immediate health threat eases, he said: “History tells us that recovery from periods of high unemployment is rarely fast.
“The longer this downturn goes, and the worse it gets, the less likely the labour market and the broader economy can spring back afterwards.”
Grattan researchers used a range of methods to estimate the size of the COVID-19 employment shock, including data on which jobs require people to work in close proximity to other workers or the public.
They concluded that Australia’s unemployment rate will probably rise to about 12 per cent — the highest since the Great Depression in the 1930s.
The federal government’s $130 billion JobKeeper wage subsidy will disguise much of the impact of the crisis on employment.
Some Australians off work will continue to be regarded as “employed” because they will receive pay from their employer via the JobKeeper scheme. And others, especially older workers, will give up looking for work and will therefore not be counted in the unemployment rate.
“Our governments are rightly spending record amounts trying to cushion Australian workers and businesses from the worst impacts of this unprecedented crisis,” Mr Coates said.
“But our paper shows that the economic shock from COVID-19 is going to be so big, and the effects so long-lasting, that more support will be needed.”
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