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Job losses across inner city could last years

They have fallen 7 per cent in Sydney’s eastern suburbs, by 6.8 per cent in the inner south-west and by 5.7 per cent in Parramatta.

Payrolls are down by 7.8 per cent across Victoria but they have tumbled by 10.3 per cent in Melbourne’s inner suburbs, by 8.2 per cent in the inner south and by 8.1 per cent in the city’s western suburbs.

In research into “labour market persistence from recessions”, RBA economists Iris Day and Keaton Jenner looked at the impact of past serious economic downturns on job markets.

They found those parts of the country that had “larger-than-average downturns” had “significantly” higher unemployment rates for around a decade.

“COVID-19 may also have persistent effects on some segments of the labour market,” they found.

“This could occur if workers’ skills decline to a lack of use or because there is perceived to have occurred.

“It could also be because the skills a person used in their previous job were specific to a particular firm or industry and are not as well suited to other firms.”

Their findings covered Australia’s last recession in 1990-91 as well as the global financial crisis during which unemployment lifted sharply.

Bourke Street in Melbourne's CBD is usually a thriving economic powerhouse. But RBA research suggests it could take hard-hit areas years to recover from the recession.

Bourke Street in Melbourne’s CBD is usually a thriving economic powerhouse. But RBA research suggests it could take hard-hit areas years to recover from the recession.Credit:Wayne Taylor

Apart from having a long-term impact, the researchers also found some evidence that younger and older people suffered similar levels of long-term impacts on unemployment following a recession.

While unemployment unexpectedly fell in August to 6.8 per cent from 7.5 per cent, it actually lifted for people aged 55 and over to its highest level since the late 1990s. The under-employment rate for this group also climbed for both men and women.

Payroll jobs among those aged 70 or older have fallen by the most of any age group, dropping by 10.9 per cent since mid-March. While there has been a recovery among teenagers, payroll jobs for those in their 20s have fallen by 6.6 per cent.

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The researchers warned that while it was too early to tell, changes in sectors such as retail caused by the pandemic may leave a long term impact on employment in those areas.

They said the need for social distancing which has increased the use of online retailing and a reduction in demand for service industries could lead to a reorganisation of some industries that would “outlast the pandemic”.

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