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JobKeeper could ‘disguise’ unemployment rate


Over a quarter of Australia’s workforce could be out of a job due to COVID-19, but the JobKeeper subsidy could disguise “much of the impact” of the economic downturn, says the Grattan Institute.

By Aidan Curtis 11 minute read

The Grattan Institute estimates that 14 and 26 per cent of Australians could lose work as a result of the economic shutdown, surpassing the unemployment figures during the Great Depression.

Of the 13 million Australians employed in February, 26 per cent amounts to 3.43 million Australians losing work, according to the research paper.

However, the Grattan Institute believes the government’s $130 billion JobKeeper wage subsidy could disguise the true numbers of jobs lost.


While Australians will be out of work, they will still be counted as employed because they receive JobKeeper payments from their employer, bringing the estimated unemployment rate down to 10 to 15 per cent.

“If all of these people were classified as ‘unemployed’, the unemployment rate would rise to 30.2 per cent,” the working paper said.

“But not all the people who lose work as a result of COVID-19 will be classified as unemployed.

“Some who lose work will continue to be regarded as ‘employed’, because they will carry on receiving pay from their employer via the JobKeeper program even if they’re not at work.

“And others will drop out of the labour force entirely, and will therefore not be counted in the unemployment rate.”

The Grattan Institute has warned that, if its estimates “are even close to accurate”, then Australia is facing “one of the worst economic downturns in its history”.

Its research paper did note, however, that there is currently no way to directly test the validity of the research methods and results.

“Since the Australian economy has never previously experienced the kind of shutdown and labour force shock resulting from COVID-19… our results should be regarded as approximate and indicative,” the paper said.

Aidan Curtis


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