Much has happened since we last updated our model projections. We’ve had the ABS regional labour force data (see here for commentary and the Conus/CBC Staff Selection Trends) which showed large declines in participation across the nation, state and regions; the ABS produced their Payroll data up to the week of May 2nd which showed some improvement in payroll numbers across some of the most previously heavily impacted industry sectors (see here for an overview); news that the QLD borders could stay closed until September; the release from the Dept of Social Services of numbers claiming Jobseeker up to April; and recently the news about a possible 3 million over-count of the number of people on JobKeeper.
All of this has impacts on our model and we have now incorprated these factors into it. In particular we have run the model working on the assumption that the JobKeeper program ends, as scheduled, in September but also done a run assuming that the JobKeeper initiative is extended to the end of the year. We’re not making any determination about the likelihood (or desirability) of such an outcome but rather wanted to try and get some idea of what the impacts of such a move might be. The tables below provides some estimates of an answer, bearing in mind that this is inevitably reliant on a series of assumptions around how many of those on JobKeeper would stay employed, how many might leave the labour force altogether, and what impact this might have on participation.
The first results show the outcome with JobKeeper ending at the end of September.
This shows unemployment rates rising again in the final quarter of this year, although levels remain slightly below the highs seen mid-year. It’s clear that tourism dependent Local Govt Areas such as Whitsundays, Douglas and Cairns are likely to end the year with unemployment rates still in double-digits and with significant contraction of economic activity.
While our projections see the national unemployment rate topping out a little lower than the Treasury forecast of 10%, the ending of the JobKeeper program is likely to see a second spike up in unemployment and we finish the year around 8.5% unemployment.
What would things look like if JobKeeper were extended?
We see that JobKeeper extending to the end of 2020 would result in unemployment rates between 1.5 and 2.6 ppts lower across the various regions at the end of 2020. It also shows the level of employment would be some 370,000 higher across the nation; Queensland would see more than 65,000 extra employed. Among the LGAs Cairns would be up 2,300 while the Gold Coast could see 9,500 more employed.
The massive reported $60bn ‘underspend’ of the JobKeeper program, and the result that the expected fiscal stimulus to the economy could be much less than previously thought, will no doubt lead to growing calls for some extension (either in scope or time) of the JobKeeper program. Those calls are sure to be particularly vocal from regions where recovery is unlikely to be very advanced by September, especially if QLD’s borders do remain closed for an extended period.