SYDNEY – Australia’s economy could lose more than 100,000 jobs in the coming months, putting big teeth in a dramatic recovery that has taken place so far, as the federal government pushes completion of the salary subsidy scheme which has been a significant support to companies and employees hit harder by Covid-19-related Locks.
Up to 110,000 will lose their jobs in the coming months, with sectors of the economy still vulnerable such as travel outweighing the losses, according to Nicholas Guesnon, a Commonwealth Bank economist in Australia.
Such a downturn in the labor market could lead to a recovery in consumer and business confidence, slowing consumer spending which has contributed to the rapid recovery of the economy from mid-2020.
The so-called government JobKeeper scheme supported around 1 million businesses and 3.6 million employees in mid-2020. This fell to 500,000 businesses and 1.6 million employees at the end of 2020 and then to 960,000 employees in the year 2020. January.
Mr Guesnon estimates that around 900,000 employees will remain dependent on JobKeeper in the days leading up to its withdrawal on March 28.
It expects high-risk businesses to see up to 25% of paid employees lose employment; up to 10% in medium risk businesses and 5% in low risk businesses.
Work in the transport, arts and leisure, accommodation and food services industries is at greatest risk in the coming weeks, he said.
“These businesses are aware of international travel and will also suffer severely when restrictions and locks are imposed,” he said.
The gloomy outlook comes despite business and consumer confidence rising from the beginning of the year.
The National Bank of Australia’s business confidence index is up 10 points from December to +16 in February.
Consumer confidence rose 1.5% last week, according to ANZ Roy Morgan.
Strong gains recorded by earnings in recent months and strong GDP numbers last week have boosted confidence, ANZ Australian Head of Economy David Plank said.
The boost in confidence should help the economy quickly adapt to the expected sharp jump in unemployment, economists said.
Su-Lin Ong, a senior economist at RBC Capital Markets, expects the damage to the labor market will not be short-lived.
She expects the unemployment rate, which stood at 6.4% in January, to be lower than 6% by the end of the year. However, with the removal of JobKeeper unemployment will rise to 6.7% in the coming months but then return sharply.
Key job market indicators such as job advertisements remain attractive and Philip Lowe, Governor of the Reserve Bank of Australia, is expected on Wednesday to reaffirm the central bank’s policy stance, which he maintains is unlikely to interest rates will be raised to 2024 at the earliest.
Write to James Glynn at [email protected]