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As another week goes by, another round of sobering economic data has been released by the ABS, this time focusing on the industry dimension of job losses.
Amongst the hardest hit sectors, employment in arts and recreation services plummeted 35% between February and May. The Federal Government’s $250 million stimulus package for the arts sector, announced last week, might be a lifeline.
Months of strict lockdowns also decimated accommodation and food services throughout the quarter, with employment falling 31%. Similarly, a $50 million relief package for Australian media in April wasn’t enough to make up for lost advertising revenue, leading to a 15% decrease in information media and telecommunications employment. ‘Other services’ (-11% employment), which includes hairdressers, mechanics and household gardeners, administrative and support services (-10%) and transport, postal and warehousing (-10%), were hurt predominantly by reduced movement of people and access to services during the lock-down phase.
Yet, employment figures only paint half the picture of Australia’s recession. Firstly, these numbers exclude the effect of decreased hours available to many workers, and underemployment. Most notably, the quarter of the Australian workforce receiving JobKeeper are counted as employed, even if they work zero hours. Consequently, total hours worked is a better indicator for comparing labour market impacts as it reflects both job losses and changes in average hours worked.
The story then becomes even more disturbing. In arts and recreation services, the number of hours worked in May was half as high as February. Accommodation and food services were much the same, plunging 47%. Other services (-26% total hours worked), administrative and support services (-25%) and transport, postal and warehousing (-23%) were next worse, jumping ahead of information media and telecommunications, which ranked third for job cuts.
Chart 1: Change in total hours worked (Feb to May 2020)
Source: ABS 6291.0.55.003 Table 11
On average, an employed Australian worked 1.5 fewer hours in May compared to February. This fall, the largest on record, was largely driven by 139,000 more people (net) working zero hours (a 17% increase). Industries that traditionally depend on tourism, business travel and foot traffic more generally, such as retail, where consumption or production is less likely to be considered essential, were disproportionately affected and forced into hibernation.
Chart 2: Change in number of employees working zero hours
Source: ABS 6291.0.55.003 Table 11
Although lockdown restrictions are loosening across much of the country, labour market pains are expected to endure.
Virus spot fires will need to be carefully managed to ensure outbreaks don’t become large enough to warrant the return of state-wide shutdowns. Victoria’s accelerating number of new cases is an extreme worry for struggling businesses praying for restrictions to ease further, and sooner rather than later. Other states are watching nervously.
It’s also likely that future job losses will include a broader range of industry sectors than those which have been hardest hit initially (the economic second wave).
Employment may partially rebound in sectors which were curtailed by restrictions, but where trading can recommence. At the same time, a broader range of sectors may be on a slow burn, in some cases working off a pipeline of activity from pre-pandemic times which hasn’t been replenished as the economy has turned down.
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.
William is a Graduate Economist working in Deloitte Access Economics’ Macroeconomic Policy & Forecasting team. Prior to joining Deloitte, William completed a Bachelor of Commerce Honours at the University of Melbourne majoring in Economics and Finance.