JobKeeper cliff: CBA predicts 110,000 job losses
As many as 110,000 Australians could lose their jobs once the government’s JobKeeper scheme expires on March 28, according to new research from the Commonwealth Bank.
JobKeeper was introduced at the start of the pandemic as a fortnightly wage subsidy of up to $1,500 per employee and since then that amount has been reduced to $1,000.
Now with the scheme set to wrap up in less than three weeks, CommBank’s economic report has found that certain sectors will be hit harder than others.
“We see transport, arts and recreation and accommodation and food services industries most at risk of job losses at the end of JobKeeper,” CommBank said.
“These industries are sensitive to international travel and also suffer badly when restrictions and lockdowns are imposed.”
Up to 25% of JobKeeper recipients in these “travel-sensitive industries” are expected to be out of work, totalling to about 69,000 job losses. This is followed by ‘medium risk’ industries - retail trade, education and rental and hiring - where 10% of recipients (or 18,000 out of 174,700) could be stood down once the scheme ends.
As for ‘low risk’ industries which include all other sectors such as construction, health care and professional services, 5% of recipients (or 23,000 out of 450,400) may lose their jobs.
CommBank has based its estimates on the assumption that around 900,000 individuals are currently receiving JobKeeper.
Strong jobs market to continue
But despite the huge estimated number of job losses, CommBank said the fallout for the broader market will be far less drastic.
“Given the strength of the leading indicators of the labour market, we expect that the overall impacts of the labour market will be short-lived and any negative impact on spending will be minimal,” the bank said.
For one, there are plenty of job listings right now, with the Australian Bureau of Statistics reporting a record 245,000 job vacancies in the November quarter - a 23.4% increase from August.
CommBank also referred to NAB’s business survey and the Westpac-Melbourne Institute index of consumer sentiment, both of which suggest businesses will continue hiring in the near term.
Finally, CommBank said that some people who lose their jobs may simply choose to exit the labour force, with JobKeeper and other government stimulus packages leaving them “better off financially” than before the pandemic.
What comes after JobKeeper?
However, for those individuals and businesses still doing it tough post-JobKeeper, there are a few options on the table for you:
- Tourism support package: With international border restrictions still in place, the federal government this week announced targeted support for the tourism industry. This will include 800,000 half-price airline tickets to encourage Australians to travel as well as collaboration with airlines and state leaders to ensure there are regular domestic flights.
- New SME Business Loan Guarantee Scheme: The government also has plans to expand its business loan guarantee for small to medium-sized enterprises (SMEs) who are currently on JobKeeper. The new scheme will see the government back 80% of eligible loans, and it’ll also enable SMEs to significantly boost their cashflow by taking out larger loans of up to $5 million over a longer period of 10 years.
- JobSeeker: In light of the $150 Coronavirus Supplement expiring at the end of March, JobSeeker payments will be permanently lifted by $50 a fortnight from 1 April onwards. This means people on JobSeeker will receive $615.70 a fortnight, which is still below the current rate of $715.70 a fortnight (assuming they are single with no children). To see how much you will get paid, visit Services Australia. Remember that to qualify for these payments, you’ll need to complete a minimum number of job searches per month - this will jump from 8 to 15 in early April, and then to 20 in early July.
- Further home loan relief: The other end-of-March deadline to keep in mind is for loan deferrals. If you’re one of the many mortgage borrowers who took a repayment holiday, it’s time to figure out your next steps. Mozo’s Director, Kirsty Lamont urged Australians to speak to their lender now and discuss what options would suit their situation the most - whether it’s seeking a loan extension, accessing a better interest rate cut or switching to interest-only repayments.
For a more detailed look of support measures available to COVID-19 affected individuals and businesses, head on over to our coronavirus financial guide.