Don’t get attached to JobKeeper, says PM
It’s been just over a month since the official launch of the JobKeeper program, but Prime Minister Scott Morrison has already suggested it might have an earlier end date than expected.
“What our objective is, is to grow the economy and get people back into jobs, and we’re making sure that people are being supported by the economy, and not the taxpayer, as quickly as possible,” he said.
“People don't want to be on JobKeeper and JobSeeker. They want to be in a job that's paying them.”
The wage subsidy was first announced in late March as the coronavirus outbreak was threatening to overturn the Australian economy. Under the scheme, businesses are able to apply for subsidies of up to $1,500 per employee, to be paid out on a fortnightly basis.
So far, around 768,000 businesses have signed up for the scheme, 40% of which are sole traders.
But the success of the containment measures - and the subsequent easing of restrictions over the coming weeks - have put a big question mark over the necessity of the scheme in the Government’s eyes.
“I need to stress again that that was a temporary lifeline put in place to help Australians through the worst of this crisis. It comes at a very significant cost, not just to current but to future generations as well,” Morrison said.
On Friday, the Government laid out a three-stage plan for reopening the economy, which according to the Treasury could restore 850,000 jobs in the months ahead.
If successful, we could see an overhaul of the JobKeeper program well before its scheduled end date of September 27.
What’s the outlook for employment?
While the JobKeeper scheme is playing a big role in maintaining employment throughout the current economic contraction, the number of unemployed Australians is still expected to skyrocket in the coming months.
Baseline forecasts by the Reserve Bank of Australia put the number of job losses at around 1 million. If realised, this would bring the unemployment rate to around 10%, the highest it’s been since 1994.
That’s assuming the current restrictions remain in place until June. If the virus is controlled and restrictions are phased out sooner, the outlook for the labour market is much more positive, though the consensus is we’ll still be playing catch-up for a few years.
“Because of the better health outcomes and policy stimulus in place, the rebound in consumer demand and reduced uncertainty about the outlook would allow businesses to rehire workers and resume investment plans quickly,” the RBA said in its latest Statement on Monetary Policy.
“The hours of existing workers would also increase in response to rising demand, and the unemployment rate would be expected to move from a peak of around 10 per cent to be around its pre-COVID-19 level by mid 2022.”
For information about the assistance available to households and businesses, along with tips to keep your finances in good health amid the current crisis, browse our guide to coronavirus and your finances.