New forecasts released by the Reserve Bank today highlight the severe economic fallout from the Coronavirus, with unemployment expected to reach double digits and remain elevated for years to come.
The RBA’s expectations of high and persistent unemployment and underemployment indicate the economy is highly unlikely to simply snap back on Scott Morrison’s six-month timeline.
The Statement highlights that the recovery will probably be patchy and hundreds of thousands of workers are at risk of being left behind.
Even under the Reserve Bank’s most optimistic scenario, the unemployment rate is not expected to return to its pre-COVID level for a couple of years, which will have devastating consequences for so many families and communities.
According to its latest Statement on Monetary Policy, the RBA is expecting:
- GDP to fall by around 10 per cent over the first half of 2020 and by around 6 per cent over the year as a whole; and
- Unemployment to be around 10 per cent by June, and remain above 6 per cent over the next couple of years.
While economic growth is expected to recover in the years ahead, the size of the economy will take some time to return to levels previously expected by the RBA.
Even before this crisis, the Reserve Bank had repeatedly downgraded it expectations for Australia’s economic growth.
The RBA has highlighted that protecting jobs is critical to the recovery, but many hard-hit casual workers have been excluded from the JobKeeper Program:
- “Much will depend on how well employment relationships can be preserved over the period of restrictions – including through the use of the JobKeeper Payment”
- “The household services sector, which has contributed the most to employment growth over recent years and has the largest share of casual workers, has been the most affected”
- “Hours worked are likely to have declined across all industries, but the decline will be most acute in hospitality, entertainment and tourism-related industries and for casual workers”
- “Around one quarter of employees in these [accommodation and food, and arts and recreation] industries are casuals and have been in their jobs for less than 12 months and therefore would not be eligible to receive the JobKeeper Payment.”
The Morrison Government needs to urgently act to protect more jobs now and ensure longer-term support is provided to Australian workers, businesses and communities in the months and years ahead.
Scott Morrison and Josh Frydenberg’s reluctance to level with the Australian people, to present a plan for what’s next or to include more workers in the otherwise-welcome support packages shows how little they understand about the challenges facing real people in the real economy.
The release of these figures are a welcome development but still no substitute for a full set of updated economic and budget figures and forecasts from the Government, which should be released at the next Parliamentary sitting in May in lieu of a full Budget.