Australia continues to recover strongly from the impact of COVID-19 but the recovery phase varies from region to region. In this update, Rob identifies regions that may be vulnerable to the end of JobKeeper.
If you are keen to learn more about this release for your LGA, please feel free to get in touch. This blog is written to support our suite of economic tools and services that inform economic development strategies and COVID-19 recovery planning. Learn more here.
What is the employment loss from the end of JobKeeper?
The conclusion of JobKeeper in March 2021 is expected to have a significant impact on the labour market over the next few quarters. In our consulting projects for Local Government we have developed a number of indicators to look at the vulnerability of a region to the end of JobKeeper. One of the indicators we have used recently1,2 is the change in hours worked compared with the change in employment. The gap between the two indicators shows the positive impact of JobKeeper in supporting employment).
This vulnerability indicator may underestimate the JobKeeper impact as there are a range of reasons why hours worked didn’t fall even further. (e.g. the usual role of an employee changed from customer service to other roles such as delivery or building maintenance). Nevertheless, it is a useful indicator to look at the vulnerability of regions post JobKeeper.
At a national level, hours worked was down 0.92% in February 2021. Employment however had recovered to its March 2020 level. This suggests that JobKeeper was supporting around 124,000 jobs in February 2021. The strong improvement in hours worked in March was encouraging and suggests that the employment loss from the conclusion of JobKeeper may end up being at the lower end (or even below) of the Treasury estimate of 100,000 to 150,000 workers3.
Which regions are vulnerable to the end of JobKeeper?
The same methodology can be applied to labour force regions across Australia to identify regions vulnerable to the end of JobKeeper (i.e. have the largest gap between the change in hours worked and employment).
Looking at the table below we see that Greater Melbourne is most vulnerable with the extended shutdown in Victoria taking its toll. In Greater Melbourne, hours worked was down 7.2 per cent since February 2020, whilst employment was down by 3.8 per cent. Regional Queensland appears vulnerable as well with many tourism regions like the Gold Coast and Cairns Region still impacted by border closures and a drop in international visitors.
But the recovery is uneven across the country with the ACT and Greater Hobart now back to their pre-COVID position for both hours worked and employed.
The sub-regions (SA4s) that appear to be the most vulnerable from the end of JobKeeper include:
- Melbourne North West (VIC)
- Murray (NSW)
- Manudarah (WA)
- Cairns (QLD)
The next update of regional labour force data will tell us more about the recovery post Feburary 2021. Stay tuned.
Why does this matter?
Understanding what is happening in your local economy is a critical step in developing strategies that target local issues. Monitoring the recovery allows decision makers to make informed decisions about where to focus their efforts and which sectors, precincts and community groups still need support.
.id is keen to contribute what we can to making more informed decisions in this important field. economy.id provides a wealth of information to help you identify how vulnerable your region is to the economic downturn so you can prioritise programs and investment in the right areas. This includes information about:
- Unemployment Rate
- Job and GRP estimates updated quarterly
- Industry performance
- Business entries and exits
- JobSeeker (available on profile.id)
If you are keen to learn more about how to use economy.id to inform your recovery plan or economic development activities, please get in touch. We have also developed a suite of economic tools, consulting services and insights that inform economic development strategies and COVID-19 recovery planning. Learn more here.
Footnotes
1 proposed by Professor Jeff Borland
2 This is also well explained in Westpac’s Deeper Insights on the Australian Labour Market.
3 Treasury estimate of 100,000 to 150,000 workers.
