JobKeeper has been described as a “country-saving moment”, with a new report revealing just what role the wage subsidy played during the pandemic.
Job losses would have doubled during the coronavirus pandemic if the federal government did not implement the JobKeeper wage subsidy scheme, according to a new report.
Treasurer Josh Frydenberg said the JobKeeper discussion paper published by the Reserve Bank of Australia on Monday, confirmed emergency wage relief implemented in April was a “country-saving moment”.
The RBA in its detailed review of the Morrison government’s key support initiative during the coronavirus pandemic, revealed about 700,000 workers were saved from unemployment.
It also found one in five workers would have lost their jobs if they were not supported by the $1500 a fortnight subsidy in the first four months of the pandemic.
“JobKeeper has provided an economic lifeline to more than 3.5 million Australians and in the words of the RBA ‘reduced total employment losses by at least 700,000’,” Mr Frydenberg said.
“Underlining the incredible impact JobKeeper has had the RBA finds that ‘overall employment losses would have been twice as large over the first half of 2020 without JobKeeper’.”
JobKeeper was first introduced in April and was available to businesses impacted by virus lockdown measures.
The policy allowed businesses to retain staff and subsidise wages for part-time and full-time employees.
“We find that JobKeeper played an important role in cushioning the decline in employment over the first half of 2020,” the RBA said in its report.
“Overall employment losses would have been twice as large over the first half of 2020 without JobKeeper.”
In September, JobKeeper payments tapered to $1100 per fortnight and are scheduled to end in March 2021.
After the onset of the pandemic, Australia’s unemployment rate jumped from 5.2 per cent in March to 7.5 per cent in July. The latest figures from the Australian Bureau of Statistics has unemployment sitting at 7 per cent.
RBA governor Philip Lowe said in his November monetary policy statement he expected unemployment to peak just below 8 per cent, however higher levels of unemployment are expected to persist until at least 2022.
“We face the prospect of a long period of higher unemployment and underemployment than we have become used to,” Mr Lowe said on November 3 when he announced further interest rate cuts to support the Australian economy.
The JobKeeper scheme has supported small and medium business and large corporations, such as Qantas, Flight Centre and Crown Resorts, which were unable to operate at the height of the pandemic.
The central bank flagged the payments had been able to reduce the scarring to Australia’s labour market; however, there would be long-term impacts from the recession.
“Policymakers should not assume that the short-term effects of the scheme will necessarily persist,” the RBA said.
“We cannot rule out the possibility that we have overstated the aggregate effects of JobKeeper on employment; for instance, if the employment effects were smaller for permanent employees than for casuals.”
It was also noted JobKeeper had more of an impact on employment levels than supporting total hours worked.
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