Australia Wage Subsidy Expiry Could See Up to 150,000 Jobs Lost
(Bloomberg) -- Australia could see up to 150,000 positions lost when the government’s JobKeeper wage subsidy expires near the end of this month, Treasury Secretary Steven Kennedy said.
“We are continuing to closely monitor the situation in different sectors and do expect that the end of the JobKeeper program will lead to some businesses closing and jobs being lost,” Kennedy said in his opening statement to a parliamentary panel in Canberra. “However, we remain confident that there will continue to be a broad-based recovery in the labor market over 2021.”
Treasury’s view is it’s “appropriate for the program to end” as other support measures take effect and in order to allow the economy to continue adjusting, Kennedy said Wednesday. He estimated between 100,000 and 150,000 JobKeeper recipients could lose employment upon completion of the program, adding there’s “a wide band of uncertainty” around the estimate.
JobKeeper was the government’s signature Covid-19 support program that sought to keep workers attached to their firms during lockdowns and other pandemic restrictions via a wage subsidy. It cost about A$90 billion ($68.7 billion) and is due to end on March 28.
Australia’s labor market has strengthened as the economy’s recovery gathered pace, with the jobless rate falling to 5.8% in February from a pandemic peak of 7.5%. Kennedy said the adjustment away from JobKeeper “will be manageable” and employment will continue to increase over the course of this year, although the unemployment rate could rise a little over coming months.
The secretary also discussed Treasury’s estimate of full employment, which is estimated to be a jobless rate of 4.5%-5%, compared with a previous level of 5%.
A lower rate “is consistent with the recent international experience of countries experiencing very low unemployment with little to no inflation,” the secretary said.
©2021 Bloomberg L.P.