In an address to an Australian Business Economists’ lunch on Tuesday, Dr Kennedy revealed that between 16,000 and 40,000 workers on JobKeeper had lost employment after the $90 billion wage subsidy program ended on 28 March.
The new figures, drawn from estimates from Single Touch Payroll microdata for the fortnight ended 11 April, are well below the anticipated 100,000 to 150,000 job losses that the Treasury had earlier predicted. The Commonwealth Bank of Australia had also earlier predicted up to 110,000 job losses through the end of JobKeeper.
Dr Kennedy pointed out that individuals who had lost their jobs through the end of JobKeeper had not necessarily gone on to JobSeeker or the Youth Allowance.
“These early data appear to confirm that the employment losses associated with the end of JobKeeper won’t derail the broader labour market recovery,” Dr Kennedy said.
“The early indicators suggest that while there have been job losses associated with the end of the program, many of these workers appear to have found, or already had, other jobs and have benefited from the broader strength of the labour market.”
With unemployment now down to 5.6 per cent, Dr Kennedy expects the unemployment rate to reach 5 per cent by the end of 2022, and 4.5 per cent by 2023–24.
While the labour market’s recovery has exceeded the Treasury’s expectations, Dr Kennedy believes the government is on the right track with its current fiscal policy to further drive down the unemployment rate before stabilising and then reducing gross and net debt as a share of GDP.
“While the recovery has been stronger than expected, there is still considerable slack in the labour market and few signs of wages and price pressures,” Dr Kennedy said.
“There is also a considerable degree of uncertainty about how the pandemic will continue to play out in Australia and internationally.
“Fiscal policy has played a large role in driving down the unemployment rate to date, and we expect this to continue with the additional stimulus coming through this budget. This should in turn provide greater impetus for real wage growth.”
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Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.