The situation would have been worse but for a sharp drop in the participation rate as tens of thousands of people withdrew from the jobs market altogether while a similar number stopped work but remain employed because of the Morrison government’s JobKeeper wage subsidy program. Sydney’s participation rate fell by 3.3 per cent, the biggest drop of any major region in the country.
Between March and April, there was a 286 per cent jump in the number of people who had been stood down or did not have enough work while there was a nine-fold lift in the proportion of people starting or losing a job.
Reserve Bank governor Philip Lowe said the collapse in jobs and hours worked was a stark reminder of the human toll of efforts to stop the spread of the coronavirus.
He told a Financial Services Institute of Australasia webinar that restoring people’s confidence, both about the health consequences of the pandemic and that the economy would rebound strongly, would be pivotal to getting the economy growing.
Another key element would be a medical breakthrough, with Dr Lowe warning the economy would suffer without a vaccine or cure. “I think it’s going to be quite a slow recovery,” he said.
Treasury secretary Steven Kennedy, giving evidence to a Senate inquiry into the government’s handling of the pandemic, said once the number of people stood down but on JobKeeper and those who had left the jobs market altogether were taken into account, the unemployment rate was closer to 15 per cent.
He said the official jobless rate, which was 6.2 per cent in April, would likely climb through May and June as people struggled to get work even as businesses reopened.
A lift in confidence, by consumers and businesses, would be necessary for the economy to return to something close to normal but even that would take time.
“I’m not predicting a V-shape recovery. But given the nature of the shock – if the government responds well with its fiscal levers, we needn’t have an L-shaped recovery, which is what people would think when it comes to a depression,” he said.
While the unemployment rate lifted only 1 percentage point in April, some regions are struggling. The ABS reported the highest jobless rate was now 12.2 per cent in Queensland’s Toowoomba area, with the next worst in the state’s Wide Bay region at 10.2 per cent.
Shane is a senior economics correspondent for The Age and The Sydney Morning Herald.