Last week the Govt confirmed the details of the JobKeeper extension (JK 2.0) which will be in place when the original JobKeeper (JK 1.0) expires at the end of Sept. Details are available at the Treasury website.
Essentially for a business to be eligible for JK 2.0, from October to Dec they will need to be able to demonstrate a 30% (50% for larger organisations) reduction in turnover for both the March-June and June-Sept quarters (and also for the Sept-Dec quarter for the Dec-Mar quarter payments). This is a more onerous criteria than for JK 1.0 which required a simple one month qualification of a similar drop to receive the support for the full 6 months from April.
JK 1.0 covered some 3.5 million workers (according to ATO and Treasury data).
Our original modelling, which agreed with the national 3.5 million on JK 1.0, estimated that this number would have fallen to just under 2 million by October had the eligibility criteria for JK 2.0 remained similar to JK 1.0. Once we have accounted for the eligibility changes we are now projecting the number of workers to be covered by JK 2.0 from October will fall to 1.47 million across Australia (Treasury are suggesting 1.4 million).
Likewise, our modelling for the Cairns Regional Council area estimated that 21,000 workers were covered by JK 1.0 and that this would have fallen to 11,700 by October assuming similar eligibility. The new JK 2.0 criteria see that estimate for covered workers by October has fallen to 9,200.
The change in eligibility between JK 1.0 and JK 2.0 are likely to see about half-a-million fewer people covered nationally by October than otherwise, and about 2,500 fewer in the Cairns Regional Council area.
While many of these workers will not necessarily end up without work after the change, it is certain that some will. This has altered our expectations for unemployment rates from our previous forecasts (details in the table below). We broadly agree with Treasury’s thinking that the headline unemployment rates across the country are likely to rise in the final quarter of this year, although we somewhat less pessimistic than Treasury who are forecasting Australian unemployment to reach 9.25%; our model is suggesting something closer to 8.5%.
More weekly ATO Payrolls data will be released by the ABS tomorrow and this should help once again to refine projections.