Nearly 600,000 Aussies jobless amid COVID-19 business shutdowns
It’s no secret businesses have suffered enormously due to COVID-19, with the latest numbers from the Australian Bureau of Statistics (ABS) driving home this message even further.
New ABS figures on Australia’s labour force show a staggering 594,300 more Australians lost their jobs between March and April.
Out of the now unemployed, 220,500 were full-time workers, while 373,800 were part-time workers.
According to the ABS, unemployment levels have now hit 6.2%.
These statistics come after the RBA predicted unemployment could peak at 10% over the coming months and remain above 7% by the end of next year.
This is despite hopes that easing social distancing measures could help to kickstart business activity again.
And as restrictions begin to lift across all states, the big question now on people’s minds is one of survival: which businesses will make it through, and which ones will remain shut forever?
The businesses that won’t survive
Research from Australian credit reporting company, CreditorWatch, reveals some small businesses were struggling even before the coronavirus pandemic.
CreditorWatch’s data shows that in the first quarter of 2019, small-to-medium enterprises (SMEs) extended or delayed their payment times by an average of almost 40%.
“[This data] shows businesses were suffering from cashflow problems well before the COVID-crisis and are in for a tough ride as we look to the next twelve months ahead,” CreditorWatch’s chief executive, Patrick Coghlan said.
Coghlan said the SMEs that faced financial trouble prior to COVID-19 are the ones that may not make it to the other end once government stimulus dries up.
These so-called “zombie companies” have essentially been “hibernating for six months”, thanks to government coronavirus support.
“SMEs have the September milestone ahead, whereby the government’s temporary changes to safe harbour come to an end. The end of this period will essentially be a litmus test and will clearly identify those businesses that have come to be known as ‘zombie companies’,” Coghlan said.
Early signs of SME recovery
But it’s not all doom and gloom.
“We have started to see the early signs of SME engines whirring again, albeit at a slow pace,” Coghlan said.
“Our credit enquiry data saw a 36% uplift towards the back end of April - an indicator of businesses investigating the credit history of potential partners.”
A recent Roy Morgan poll also indicated that business confidence began climbing up halfway through April, with businesses feeling more positive about their ability to bounce back by next year.
Want to give your business the best chance of post-coronavirus survival? Check out these money moves.
Or browse financial assistance options over at our guide to Australia’s COVID-19 support for small businesses.