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May 20, 2021

Australia’s unemployment rate is falling after JobKeeper ends

Australia’s unemployment rate is falling after JobKeeper ends

JobKeeper was the Australian government's answer to helping keep more Australians in jobs as well as supporting businesses that were affected by Covid-19. ABC News has reported on the country receiving its first view into unemployment stats since the program ended, saying that the results are mixed. The stats show that unemployment fell to 5.5% (from 5.7% pre-pandemic) but it only did so because there is a big decline in people looking for jobs, albeit from a record high.

IZA World of Labor author Pierre Cahuc has reported that temporary government schemes can have a positive economic effect but he has also noted that there are some negative effects too. "Short-time work compensation schemes can help employers to adjust labor to match demand during temporary periods of low demand such as recessions.” Cahuc writes in his article. However “[they] do not benefit all workers. Those without a secure, protected job—outsiders, in other words—not only fail to benefit from such a scheme, they might indeed suffer from its introduction. The more secure permanent work is protected, the more difficult it is for outsiders to access this, or indeed any, work,” he adds.

Ultimately, The Bureau of Statistics announced that there wasn’t a “discernible impact” they could find from the end of JobKeeper between March and April. Bjorn Jarvis, the bureau’s head of labour statistics said that “Some of the 31,000 fall in employment may relate to the end of JobKeeper, but it could also reflect usual month-to-month variation in the labour market and some larger than usual seasonal changes similar to those we saw earlier in the year.”

That being said, Australian employment website Seek reported that it has recorded its second consecutive record month of job ads and that the number of available positions was up 11.9% in April compared to March. The number of applications per position were also at the lowest level since 2012 which indicates that job hunters had a better chance of succeeding. Trades and services, hospitality and tourism, healthcare and medical, manufacturing and logistics, education and training, and retail were some of the industries with the highest number of jobs advertised.

Whilst most economists believe that this month’s employment dip will be short-lived based on the strength of job advertisements, conditions in business surveys, and the growth in reports of worker shortages, others warn that the pace of economic recovery is slowing down. “Looking ahead, the data is likely to become patchier and more 'normal' month-to-month,” Sarah Hunter from BIS Oxford Economics said.

Read Pierre Cahuc’s article Short-time work compensation schemes and employment and find more content on Covid-19 and its impact on the labor market here.