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All eyes are on Victoria and the impact that additional restrictions will have on the State’s economic performance – notably jobs. On that front, ABS payroll data released today is starting to tell the story.
Since COVID-19 took off in Australia (i.e. since the 100th case), 6.7% of all Victorian jobs have been lost. That’s the largest loss across any state or territory, and well above the national average of 4.5%. The gap kept building in July, with Victorian jobs down by 1.5% or about 50,000 over the 4 weeks to 25 July, compared with net jobs growth across the rest of the country (excluding Victoria) of 0.4%.
Chart: Change in the number of jobs since COVID-19
Source: ABS 6160.0.55.001 Weekly Payroll Jobs and Wages in Australia, Week ending 25 July 2020
Of course, the numbers for Victoria will continue to get much worse, with Stage 4 restrictions for Melbourne only commencing on the 2nd of August, so the next reading from this survey will show a larger divergence from the rest of the nation.
The data available for the 4 weeks to 25 July tells us that recent Victorian job losses were heaviest in agriculture (-5.7%), arts and recreation (-3.7%), and accommodation and food services (-3.4%). There were also substantial losses from the education sector (-3.2%) and from other services (-3.3%) which includes car mechanics, hairdressers and nail salons, religious services and laundry/dry-cleaning services.
Beyond those already affected, construction, manufacturing and much broader parts of wholesale and retail are likely to climb further up the list of hardest hit Victorian industries, having to cut back operations to defined shares of total capacity during Melbourne’s Stage 4 lockdown.
The are some small bright spots for jobs in Victoria though, with jobs being created in the state’s public sector (5.3%), the health and social services industry (3.8%) and the transport, postal and warehousing industry (3.5%). Many of these job gains are linked to the pandemic with the Victorian Government taking on additional staff to help tackle the outbreak, the health sector taking on more nurses and other staff to care for COVID-19 patients, and delivery services needing still more staff to help manage the mass increases in online shopping.
Across the rest of the nation, there has been something of a jobs rebound in accommodation and food services (7.1%), arts and recreations (2.2%) and retail trade (1.3%). Parts of these sectors (which had been essentially shut down) are now able to open up and take on more staff (aside from in Victoria) as COVID-19 is brought under control in most of the nation.
The divergent Victorian job losses have come at the same time as the JobKeeper review. Initially scheduled to end in September, Jobkeeper has now been extended into March 2021. Further amendments were also made to the program just last week in the wake of Melbourne’s Stage 4 lockdown, which is estimated to affect up to an additional 400,000 workers. Now the ‘decline in turnover test’ that businesses must satisfy can relate to just the current September quarter rather than both the September and June quarters – see Deloitte’s note on these changes here. The change will mean that a greater share of the up to 400,000 Victorian workers stood down will keep their employment under JobKeeper, rather than end up as next month’s statistic, amid new job losses.
Beyond JobKeeper, targeted stimulus will likely be needed to support various parts of the Victorian and national economies – particularly for the industries most negatively affected by lockdown restrictions and those that may still not have access to JobKeeper by virtue of their size or due to having a largely casual workforce.
David is a macro economist with extensive experience in applied economic and quantitative analysis of the Australian economy, along with considerable experience in labor market analysis. David is a regular commentator on macroeconomic trends, and prepares a weekly economic briefing newsletter.
Emma is a Manager with an econometric background, working in Deloitte Access Economics’ Macroeconomic Policy & Forecasting team. Since joining Deloitte Access Economics in early 2016, Emma has applied macroeconomic analysis and econometric techniques to a range of subject matter including social policy, labour markets, the construction sector, international trade and tax policy. She has developed multiple forecast models and currently runs Deloitte’s national macroeconomic forecast modelling. Emma also frequently conducts distributional modelling and inequality analyses.