The unemployment rate in Australia will likely hit 10 percent for the June quarter because of the global coronavirus pandemic. However, early investigations have shown that unemployment levels would have been 5 percent higher had the government not introduced the $130 billion JobKeeper stimulus package.
At least 1.37 million Australians will be out of work by June, according to projections. However, according to Australia Treasurer Josh Frydenberg, that number could have soared to 2.05 million had workplaces not been offered any incentive to keep their staff on the books.
The upswing is the first time in 26 years that the country’s unemployment rate hit double digits. In particular, Australia hit its peak unemployment rate of 11.2 percent back in 1992.
Back in February, Australia’s unemployment rate was 5.1 percent. When the pandemic led to major shutdowns of businesses and stand-downs of workers, many economists feared that number would triple. The JobKeeper stimulus package seems to have lowered that. (Related: Boon or bane? Australia’s response to coronavirus means lower caseloads, but a year-long lockdown.)
“In the absence of the $130 billion JobKeeper payments, Treasury estimates the unemployment rate would be five percentage points higher and would peak at around 15 percent,” stated Frydenberg.
“More than 800,000 businesses have already registered for JobKeeper payment, which will allow the economy to recover more quickly once we are through to the other side of the crisis,” he continued.
Westpac chief economist Bill Evans agrees. “We expect the beneficial effects of the government’s JobKeeper policy to restrict the rise in the unemployment rate to a peak of 9 percent [in] June 2020 and to then see it fall back to around 7 percent at year’s end,” said Evans. Before the stimulus package was announced, Evans had earlier predicted that Australia’s unemployment rate would hit 17 percent in June.
The JobKeeper package is one of three separate stimulus packages that the Australian government has proposed to inject #320 billion, or 16.4 percent of the GDP, back into the country’s economy.
Despite the lower-than-predicted unemployment numbers, thanks to the stimulus package, government officials aren’t downplaying how bad the losses are. During an interview with the Today Show on Tuesday morning, Prime Minister Scott Morrison described the predicted numbers as “heartbreaking.”
“It’s a heartbreaking number,” stated Morrison. “Unemployment at that rate, hundreds of thousands of people losing their jobs. It is just absolutely heartbreaking.”
As part of this, Morrison said that he wanted Australians to know that the country came into what he described as a “dual health and economic crisis” in a strong financial position. However, he admitted that what has happened was a “big blow” to the country nonetheless.
“I don’t want to lessen that in terms of how we speak of it,” explained Morrison. “It’s seriously impacting on our economy.”
Despite how much JobKeeper has lowered the unemployment, members of the opposition in Australia’s parliament are arguing that it’s still higher than it needs to be. Shadow Treasurer Jim Chalmers, who serves as Frydenberg’s opposite under the Westminster system, has argued that while the stimulus package was a good move, it could have been “that much better.”
Currently, the Jobkeeper stimulus package is only offered to permanent staff or those who have worked with one company for more than 12 months. Australia’s Labor party has pushed for more casual employees and freelancers to get access to the package as well.
“The unemployment rate will be higher than it would be if Josh Frydenberg exercised his powers to give more casual and other workers access to JobKeeper payment,” read a statement from Labor’s finance team.
“When unemployment spikes in the next few months remember hundreds of thousands of job losses could have been prevented if the Treasurer picked up his pen and included more workers currently left out and left behind,” continued the statement.