SYDNEY, Australia – Australia’s unemployment rate could rise to 10% because of the ongoing health crisis due to COVID-19, pushing the country further into recession.
For the last three decades, Australia is currently soaring to the highest unemployment rate, with more than 1.4 individuals expected to be out of their jobs because of the ongoing coronavirus pandemic. If the number goes up even further, it will be the first time for the country to hit double digits since 1994.
Based on the latest figures published by the Treasury, that jobless rate in the country could hit double in the second quarter from that last recorded 5.1% to 10%. While the data doesn’t provide any confirmation of a forthcoming recession for Australia, it’s showing that a massive economic downturn may be in the future as the country deals with the impacts of COVID-19.
The last time that Australia hit double digits in the unemployment rate was in April 1994, which was only slightly lower from the peak jobless rate in the country, which was in 1992 at 11.2%.
However, based on the estimates from the Treasury, the country’s jobless rate peak at 15% had the Australian Government failed to intervene with the wage subsidy program worth around $130 billion.
According to Treasurer Josh Frydenberg, the economic shock that is currently happening in the global economy due to the COVID-19 pandemic is considerably more significant than what the global financial crisis brought more than a decade ago.
Mr Frydenberg further stated that every sector in the Government and the Australian industry are working towards finding solutions to keep people in their jobs and help businesses establish ways to recover after the pandemic.
The estimate from the Treasury is also in line with the prediction given by Westpac. Based on the lender, the economic impact brought by the ongoing health crisis due to COVID-19 could see the country’s jobless rate to rise as much as 17%. However, Westpac revised the number to a much lower 9% after the JobKeeper system introduced by the Government to provide aid to individuals and businesses profoundly affected by the virus outbreak.
Mr Frydenberg further stated that there are now over 800,000 of Australian businesses who sent their applications for the JobKeeper payment scheme. The system aims to help companies to gain quicker recovery on the other side of the pandemic, he said.
Meanwhile, Jim Chalmers, shadow treasurer, argued that while the wage subsidy is a good move for the Government, there are far better options and coverage.
According to the Labor opposition, the scheme should cover more Australian workers who are also facing the same jobless dilemma due to the coronavirus outbreak. They reasoned that casual workers should also gain access to the same wage scheme, regardless if they have a short or long-term link to a single company or employer.
Further, an economist from the Deloitte Access Economics, Chris Richardson, commented about the impending downturn. He said that Australian studies, as well as from overseas, suggest that if s individual will not join the workforce after two years of losing his/her unemployment during a recession will most likely never going to get a job back again.
Meanwhile, universities in Australia plead to gain access to wage subsidies. According to Aussie universities, the efforts from the Government to ensure funding this year is a massive help in helping curb the effects of the virus outbreak and the travel shutdowns that came with it.
However, based on the estimates from the sector, the needed money for such relief could reach between $3 to $4.6 billion this year.
They are expecting for the Australian Government to keep the $18 billion worth of funding to universities, even with the decline in domestic students. There will also be a subsidy for additional 20,000 places for the new online short-courses and delayed the increase in administrative fees.
According to Dan Tehan, Australian Education Minister, the support and aid from the Government will provide much-needed relief for Australians who lost their jobs amid the outbreak and for those wanting to retrain.
However, Universities Australia countered with its estimates, which shows that over 21,000 employees are still looking towards losing their jobs and sources of income across the 39 sectors in the country in the next six months. On the other hand, the institution admitted that the figures could be worse without the funding guarantee from the Government.
According to Universities Australia chairperson, Deborah Terry, universities are starting to cut their spending across the board. Most reductions include those in their operational costs, deductions in salaries for senior staff members, and delays in vital capital works.
However, Ms Terry confessed that despite the reductions individual universities are doing, it wouldn’t be enough to have enough assets to cover the estimates as their profits decline. She said that the drop in revenue for Australian universities could be around $3 to $4.6 billion.
The massive hit that the education sector is experiencing is primarily due to the drop in the international student market amid the coronavirus outbreak and the travel restrictions put in place to curb the spread of the disease.
Meanwhile, Australian universities are not eligible for the JobKeeper wage subsidy from the Government, despite the sector listed as not-for-profits. Unless they take a much bigger hit on their revenue, then they can access the payment scheme.
According to Professor Terry, Aussie universities are now looking towards getting low-interest loans from lenders to help aide their financial difficulties right now.
Further, the National Tertiary Education Union also stated that the offered relief from the Government to the education sector hardly amounts to anything. It is because they already budgeted for the money they are going to receive, the union said.
Alison Barnes, the national president for the union, commented that the Government’s subsidy is not enough to cover the gaping hole in the financial crisis that universities are facing right now.
Meanwhile, Andrew Mohl, the former chief executive of AMP, said that the current economic shutdown is costing the country over $550 million worth of decline in the gross domestic product (GDP) per day. He noted that a staged lifting of the present restrictions could help curb the losses with the least risk of the virus spreading further.