Covid-19 wrecking employment in service industries

Unemployment could go as high as 16% amid corona virus as low-income earners the worst hit.

Lower-income earners are twice as likely to have their jobs taken from them by measures to combat the corona virus than those on higher pay.

And the Covid-19 restrictions are wrecking employment in a range of service industries which women and the young depend on for jobs, the Grattan Institute warned on Sunday.

About 28% of Australians could be out of work in the weeks ahead, although the impact of the wage replacement schemes will keep the official unemployment rate lower.

The job destroyer in the services sector is the 1.5 meters physical distancing requirement. More than half of all workers in the hospitality industry could be left without work due to Covid-19, the Grattan research said.

It is also affecting the job security of educators and trainers, those in the retail trade and real estate.

But amid the gloom was a hope that the jobkeeper wage subsidy, and the fact the restrictions on business were driven by health concerns, might mean the job recovery is faster than in previous serious slumps.

“We calculate that between 17% and 28% of Australian workers – 2.2 million to 3.6 million people – could be out of work in the coming weeks as a direct result of the spatial distancing measures now in place. If they are not already,” the institute said in a statement.

“Unemployment will rise substantially in the coming months, but the commonwealth government’s new jobkeeper wage subsidy will obscure much of the impact.

“Nonetheless, we expect the unemployment rate will rise to between 10 and 16%.”

The Grattan research warned the hit to jobs from the pandemic could be larger than estimated.

“Firms and households not initially affected by public health measures will scale back their spending to preserve cash flow in the face of an extended downturn,” it said.

The Business Council of Australia welcomed initial moves by the national cabinet last Thursday to reduce restrictions should the suppression of the infection spread continue to be effective.

Its chief executive, Jennifer Westacott, said in a statement released on Monday there could be no trade-off between health and economic recovery.

“The business community stands side by side with state and federal governments to safely re-open our nation by providing safe workplaces for employees, customers, and suppliers,” Westacott said.

“It is vital that together we rebuild a sense of confidence in the community that it will be safe to go back to work, go to the shops, and go about our daily lives, so we can start moving forward.”


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