Posted: 16 Jun. 2020 5 min. read

JobSeeker: applying a local lens

Weekly economic briefing

The broad economic impacts for Australia of COVID-19 – and particularly in terms of job losses – are now reasonably well known. The country saw a large drop in employment across in April – around 600,000 fewer jobs overall – with interim information on payroll levels pointing to further declines in the May data due out later this week.

But the measured unemployment level lifted by just 65,000 in unadjusted terms, implying that much of the fall in employment can be seen in sliding participation rates – notably for women, and those aged under 25 or over 65.

The loss in jobs has been accompanied by rapid, and extensive, changes to government payments to those out of work. Newstart payments were replaced by JobSeeker payments in March – with recipients rising from around 725,000 under the old scheme, to 1.22 million under JobSeeker in April. This has created a particularly large divergence between the official measure of unemployment and the number of benefit recipients, and it provides another indication of “hidden” unemployment levels – the number of benefit recipients rose by more than 6½ times the Bureau of Statistics unemployment measure.

 

Unemployment measures, Australia

Detailed data at the regional level, allows us to see where the impact of COVID has been most significant. The chart below shows the relationships between recent employment results (the horizontal axis), the socio-economic health of a region (the colour – with the higher Socio-Economic Indexes for Areas – SEIFA –indicating a wealthier region) and the rate of job losses implied by the rise in JobSeeker recipients in the region between the end of 2019 and April 2020.

 

Job Seeker impacts to April 2020 – by small area and underlying economic health

Source: Deloitte Access Economics Employment Forecasts

 

Not surprisingly, those areas with typically lower unemployment have a higher SEIFA index, but the correlation between SEIFA and the scale of COVID-19 job losses is also significant. By and large, those local areas which were already weaker economically have been hardest hit by the COVID downturn.

This is a significant outcome, particularly if the downturn in the labour market is extended for any length of time, as the most affected local areas may be less able to cope with economic shocks being seen.

There are some exceptions to this general rule. A number of areas linked to the tourism sector, for example, have been particularly hard hit by the downturn. Some of the “outliers” on the chart above (in the top left hand section) include areas like Port Douglas and Daintree, Airlie Beach and the region around Byron Bay – areas which had relatively low rates of unemployment, but where well in excess of 10% of local jobs have disappeared due to the impact of COVID-19. Those areas will struggle until border restrictions are relaxed, and those businesses reliant on overseas visitors are likely to struggle for an extended period.

More about the authors

David Rumbens

David Rumbens

Partner, Deloitte Access Economics

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.

James Allnutt

James Allnutt

Principal, Deloitte Access Economics

James is one of Australia’s leading demographic modellers.  He has extensive experience in determining the methodologies required for modelling, and has developed detailed models to the requirements of numerous clients. James is the author of the quarterly publication Employment Forecasts.