The jobs likely to be lost would be in the accommodation and food sectors, as well as retail, arts and recreation, according to Conus Consultancy economist Pete Faulkner.
Those sectors have already dealt with a bad year, although many of the major retail chain stores have been able to take advantage of the pandemic lockdowns and restrictions by moving their focus to online sales.
“I’m forecasting for Cairns (will be) substantially worse than at the national level due to the region’s heavy reliance on tourism, and particularly international tourism,” Faulkner said.
Adept Economics Gene Tunny agreed but added the Whitsundays to the list and said the Gold and Sunshine coasts were less likely to feel the full force of the impact because they were both close to the Brisbane market.
“We really need an extension (of JobKeeper) in some form for tourism or things will get brutal,” Tunny said.
“It will subtract from growth in a big way in the second quarter, no doubt about that. Dwelling construction will offset that to an extent.
“The Government is gambling on people spending from savings.”
Australians have about $200 billion in household savings and economists believe that if people were confident enough in the economy that money would be spent and keep unemployment from climbing too high, but Tunny said it was very hard to forecast.
Westpac this week said about 1 million people were likely to still be on JobKeeper in December, down from the previous figure of 1.6 million. The bank’s economist Justin Smirk said that nationally the unemployment levels should remain close to current levels, but agreed that the tourism, arts and recreation and hospitality would be hit.
Westpac believed there was room for the Federal Government to provide targeted support for these sectors, but so far the Morrison Government has not committed to any further assistance.
Faulkner said he thought the number on JobKeeper was closer to 1.27 million and the businesses who were still now receiving it for the December quarter were “in firms who really are still struggling”.
“My modelling suggests that there is likely to have been a further decline in those who are receiving the second (round of JobKeeper). My estimate is something around 1.27 million by the end of the scheme at end-March. A sizeable chunk of these will be within the accommodation and food and retail sectors (especially in tourism reliant areas).
“We know that their employers are still facing at least 30 per cent reductions in revenue so it is probably not unreasonable to suggest that up to 30 per cent of those jobs could be on the line.
“Therefore we could see up to 380,000 lose their jobs, although I think a number closer to 250,000 is more likely.
He said he expected people were likely to drop out of the workforce entirely and the unemployment rate could rise to something between 6.8 per cent and 7.8 per cent depending upon the scale of that decline.
But he said even at that level, it was nowhere near as bad as the forecast unemployment rate last year and was only a little worse than what we’ve already been through in the middle of 2020.
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