The data is now in for JobKeeper in the December quarter. It shows a remarkable recovery in Australia’s labour market. More than 2.1 million workers and around 520,000 businesses have graduated off JobKeeper since the end of September.
The improvements have been across the board in all states, territories, regions and sectors. In Western Australia, there’s been a 70 per cent fall in the number of people on JobKeeper in the December quarter compared to the first phase of the program from April to September. In NSW it is 60 per cent, 44 per cent in Victoria (the only state to experience a second wave of COVID), 64 per cent in Queensland, 67 per cent in South Australia, 62 per cent in ACT, 65 per cent in Tasmania, and 69 per cent in the Northern Territory.
When the numbers are broken down into regions they are instructive, with the number of people on JobKeeper in Queensland’s tourism-dependent regions like Townsville down 72 per cent, the Sunshine Coast down 66 per cent, the Gold Coast down 59 per cent, and Cairns 55 per cent.
In sectors like retail, which were hit hard early in the pandemic as health restrictions took effect, around 220,000 people came off JobKeeper in the past three months. In construction, it was 200,000; and in accommodation and food, it was 160,000.
This doesn’t take away from the fact that there are still many people in many regions who are doing it tough, but this latest data from the Australian Taxation Office is another sign the economy is strengthening.
Unemployment is now down to 6.6 per cent, with 320,000 jobs created in the past three months. The participation rate is at a record high, and job ads have doubled since April. Of the 1.3 million people who lost their jobs at the start of the crisis or saw their working hours reduced to zero, 90 per cent are now back at work.
Employment levels for those aged 35 and above are particularly strong, higher today than they were before the pandemic.
It is in this context that the Reserve Bank of Australia has updated its unemployment forecasts to 6 per cent by the end of this year and 5.25 per cent by June 2023. The RBA is expecting the size of the Australian economy to be back where it was in December 2019 by mid-2021, 6-12 months earlier than first expected.
In the words of the RBA governor, Phil Lowe, “the bounce back has been earlier and stronger than we were expecting”.
Remarkably, the RBA has the unemployment rate back to its pre-pandemic levels in just over three years. The recovery in the labour market is three times the speed of that which occurred after the 1990s recession, when it took a full decade for the unemployment rate to get back to where it was before the recession.
The resilience we are seeing in the labour market is being replicated in other areas across the economy. Consumer and business confidence are back to prepandemic levels, and a supersized Instant Asset Write-Off, announced in last year’s budget, has seen capital expenditure expectations in a recent NAB survey reach their highest level in years.
Not to mention the spark these incentives have given to the motor vehicle industry, with 80,000 motor vehicles sold in January – an increase of more than 10 per cent over the year.
Individually, each one of these data points represents more jobs on a building site, or in a car yard, but collectively they see Australia starting the year in a far stronger position than our international counterparts.
The IMF has forecast the UK’s economy to contract due to COVID by 10 per cent, Italy and France by 9 per cent, Canada, Germany and Japan by more than 5 per cent, and the US by 3.4 per cent; compared to Australia, at less than 3 per cent.
Australia is by no means out of this crisis, as more than 6 million Victorians in lockdown can attest.
There are some who are anxious as JobKeeper comes to an end but it was always meant to be a temporary program, even before we extended it for another six months. At an estimated $90bn, it is the single largest economic support program Australia has ever introduced, and has saved, according to Treasury, 700,000 jobs, helping to avoid unemployment rising as high as 15 per cent.
But the JobKeeper program, as Treasury found in its review last year, “has a number of features that create adverse incentives, which may become more pronounced over time as the economy recovers”. This includes hampering “labour mobility and the reallocation of workers to more productive roles”, as well as keeping “businesses afloat that would not be viable without ongoing support”. This is why Job-Keeper has to come to an end as our economy strengthens, and businesses and their staff adjust to the new economic environment.
It will be a combination of other government support measures across infrastructure, skills, tax and the JobMaker Hiring Credit, and the $240bn that has been accumulated on household and corporate balance sheets during this pandemic that will drive economic activity and maintain the momentum of Australia’s economic recovery.
Josh Frydenberg is the federal Treasurer.