Australia’s unemployment is the worst it’s been since 1994, but the treasurer said the government’s $320 billion economic stimulus package provides hope that Australia will recover more quickly once on the other side of the crisis.
The unemployment rate is set to surge to 10 percent—a 26-year peak—in the June quarter. That represents hundreds of thousands of Australians who have lost their jobs because of the crisis caused by the CCP (Chinese Communist Party) virus, commonly known as the novel coronavirus.
Treasurer Josh Frydenberg said it could be worse if not for government intervention in a statement released on April 14. “In the absence of the $130 billion JobKeeper payment, Treasury estimates the unemployment rate would be 5 percentage points higher and would peak at around 15 percent.”
Those 5 additional percentage points translate to 700,000 more job losses.
Prime Minister Scott Morrison lamented the forecasted unemployment figures during an interview with the Today Show on April 14.
“It’s a heartbreaking number. Unemployment at that rate, hundreds of thousands of people losing their jobs. It is just absolutely heartbreaking,” he said.
The treasurer said that the estimated 10 percent jobless rate took into consideration both Australia’s economic strength before the crisis and the stimulus packages introduced by the government in March.
Worse Than 2008
The treasurer said the current downturn is far more significant than what happened in 2008. However, he is confident that the government is on the right track in boosting business resistance through the Jobkeeper program.
“More than 800,000 businesses have already registered for the Jobkeeper payment which will allow the economy to recover more quickly once we are through to the other side of the crisis.
“Every arm of government and industry is working to keep Australians in jobs and businesses in business,” he said in the statement.
The treasurer also assured Australians that the country hasn’t lost its AAA credit rating even with the unprecedented economic incentives in place.
The $130 billion (US$83.2 billion) Jobkeeper package legislated on April 9 grants around 6 million Australian workers a $1500 per fortnight lifeline subsidy. The money is paid to employers to continue paying their employees for six months. It also brings the total economic support provided by the government and the Reserve Bank of Australia to a staggering $320 billion (US$205 billion)—more than 16 percent of GDP.
Economists responded positively to the stimulus packages. Westpac chief economist Bill Evans updated his forecasts following the announcement of the program in a video update in early April.
He recognized the program as a “major game-changer for the Australian economy” and adjusted the unemployment rate for the June quarter from an initial 17 percent (amounting to a loss of 1.7 million jobs), down to 9 percent, before falling back to around 7 percent at the end of 2020.
As for economic growth prospects, Evans forecasted that June and September will see a GDP contraction by 8.5 percent and 0.6 percent respectively, before a 5.2 percent lift in the December quarter. Overall, the economy is expected to contract by 5 percent through 2020.
According to a recent economists survey by the Australian Financial Review, the June quarter will see a significant rise in unemployment rates, with the median forecast at 8.5 percent.
The official labour force figures for March are expected to be released on April 16.