The Impact of COVID-19 on the Australian Market
The Impact of COVID-19 on the Australian Market can be felt by most industries in Australia in the form of reduced employee working hours, wage cuts, and staff reductions. Estimates show that 41% of jobs are at high risk of being terminated. This is why the Federal Government has introduced the JobKeeper wage subsidy scheme. Numerous industries in Australia have been shut down. Jobs have been terminated, and employees are being asked to take paid, or unpaid leaves as employees cut working hours or impose pay cuts. This will affect consumer spending, home price growth, and wage expectations, especially if the situation continues to worsen.
National unemployment figures do not quote how bad the situation is in Australia. According to official statistics, the unemployment rate spiked to 6.2 percent in April after having dropped to 5.2 percent in March. Official surveys also show that total employment in Australia dropped by over half a million to 12,418,700 people still employed. The number of unemployed rose by 104,500 to 823,300 people.
How does that math work out? The statistics show that approximately 490,000 people left the labor force entirely. This could be because they can no longer find work or have been forced to care for those at home during these trying times. Since these people are no longer actively looking for work, they are not included in the official unemployment records. To put it simply, they are no longer part of the official figures.
If official figures were to take into account the struggles of these 490,000 people who are no longer part of the labor force, the unemployment rate would rise to from 6.2 percent to 9.6 percent.
Decline in Number of Hours Worked
There has also been a big decline in the number of hours worked by employees. The JobKeeper subsidy was created with the aim of keeping people employed/paid, even if the employer had no work to give them. Hence, millions of workers are still tied to their employers and are still part of the “employed” category. However, this means that the rate of unemployment in Australia has been kept artificially low because people who aren’t really working are still being seen as employed.
According to recent surveys, in April 2020, the number of hours worked fell by 163.9 million hours. This is a record-breaking number, larger than the largest decline in working hours in 2007, which amounted to 36 million hours.
Rate of Underemployment
Underemployment refers to when people have jobs but are available to work more hours. Due to the current situation in Australia, the rate of underemployment has risen from 8.8 percent to 13.7 percent. This is a record-high number, beating the rate of underemployment in the late 1970s.
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