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Monday was a milestone day for Victoria, with the state recording its first day of zero COVID cases since early June. And with the passing of that milestone, the state announced the loosening of a raft of restrictions, allowing retail and hospitality to reopen from midnight tonight, and limits on gatherings eased.
After 15 weeks in lockdown, Victoria can finally take its first steps on its road to recovery.
But the state starts this recovery well behind the rest of the country: the number of people in work is 6% lower than it was before the crisis; the number of people receiving JobSeeker or Youth Allowance has more than doubled since March, and there have been a number of people dropping out of the labour force (with the Victorian participation rate down to 63.0%, compared to 65.4% in NSW)
Added to that, of those that are in work, more than one in eight Victorian employees are currently working fewer hours because of insufficient work available. That’s more than four times pre-COVID levels, and double the rate in NSW.
Chart 1: Share of employees working fewer hours than usual because of no work, not enough work available, or stood down
Source: ABS Labour force survey
But there’s still reason for optimism. The easing of restrictions around the rest of the country in June was accompanied by a sharp rebound in jobs, a fall in unemployment and pick-up in hours worked.
And Victoria can expect similar.
Pent-up demand will drive increased spending as businesses reopen. And with restrictions being eased in the lead up to Christmas and the start of summer, retailers and hospitability owners will be opening in the busiest (and most important) part of the year.
So, Victoria can expect a boost through the rest of 2020, and employment will take centre stage in that recovery.
But it’s also important to note that not all jobs will return. In the months since the peak of job losses in Australia, the skills being demanded by employers have favoured those that are more cognitive over those that are more manual. Chart 2 looks at labour force changes by skill set, comparing skills required in job gains as a share of the skills that were lost as jobs were shed. COVID has acted as an accelerator of structural change in the Australian labour force – with demand moving from skills of the hands (manual) to skills of the head and the heart.
Chart 2: Skills regained in the September quarter as a share of skills lost in the June quarter
Source: Deloitte Access Economics based on ABS Detailed labour force survey.
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.
Harry joined Deloitte Access Economics in January 2017 after completing a Bachelors of Arts and Commerce, with honours in Econometrics and Business Statistics from Monash University. Harry’s area of focus is data analytics and econometric modelling, having conducted a range of research surrounding mental health, prescription drug use, labour markets and ageing populations.