Jobkeeper winds up at the end of the month… is that a problem?
So the Jobkeeper scheme is slated to come to an end at the end of this month. There seems to be no chance that it’s going to get an extension. No one’s talking about it.
(We might see something for the tourism sector, or for other hard-hit sectors. But a nation-wide Jobkeeper scheme is set to be a thing of the past.)
So, is it going to crash the economy?
The Jobkeeper scheme, with the benefit of hindsight, was a winner. It was one of the things that helped us weather the impact of lockdown, and come sailing straight through the Covid crisis of 2020.
If I was Josh Frydenberg, I’d have to be feeling pretty happy with how it all panned out. It was a high stakes move. It could have cost a fortune and achieved nothing.
It still cost a fortune, but it did what it was supposed to do.
But, as it unwinds, is it going to leave businesses high and dry? Is it going to throw millions onto the unemployment scrap heap?
Is it going to crash the economy?
Nah… I don’t reckon.
I think it’s likely to be a pretty orderly affair.
To start with, many people have been coming off Jobkeeper naturally as the economy reopens.
At its peak in the third quarter of 2020, a million business and 3.6 million employees were receiving the payment.
By the close of the year, we were down to 500K businesses and 1.6m employees. At last count, in January it was down further to 960K employees.
It’s probably kept heading south since then. So every passing day, less and less of the workforce become dependent on the payments.
Not surprisingly, those remaining on Jobkeeper remain concentrated in the services sector – particularly in arts and recreation.
So if CBAs forecast is that 900,000 people will still be on Jobkeeper when it winds up at the end of the month, how many of those are at risk of losing their jobs?
CBA crunch some numbers. They assign risk weightings to the different industries, and then assume high risk industries will lose 25% of their Jobkeeper employees to the ranks of the unemployed. Medium risk industries will lose 10% and low risk 5%.
The industry risk ratings look like this:
When you tally that all together, you get an estimate of 110,000 people who are at risk of losing their jobs. That is, the subsidy will end, and the business will decide that they just can’t keep them on.
This sounds like a pretty reasonable guess. We know from the labour force data that there’s about 100-150K people classified as “working zero hours for economic reasons” (which is probably our Jobkeepers) and the surge has passed.
So… is 100-150K going to hurt us?
It sucks for the people involved, totally. But in the bigger picture, it’s not that big a number.
With the jobs market tightening as it is, you’d have to think we could mop up 150K in 3 to 6 months of job creation.
Vacancies were at a record level of 254,000 in the last quarter of 2020.
And the hiring measures in the survey data suggest firms are set to expand their labour forces.
So my guess is that we’re barely going to notice it. It might sting in some sectors and some regions (tourist regions?) but it’s probably not going to knock the Aussie economy off its stride.
You’ve also got to put the numbers in perspective.
Currently Jobkeeper costs $5bn odd – and that’s set to be removed.
But we’ve already walked back $24.2bn worth of fiscal stimulus since the post-Covid peak, and that’s barely moved the dial.
Not only that, Aussie households have amassed a record $187 billion in savings in 2020. An incredible amount.
So yeah. $5bn, 150,000 jobs.
I don’t see it slowing us down.