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Economists at the country’s largest bank warn more than 100,000 jobs could be lost at the end of the month when the money tap from JobKeeper dries up.
A Commonwealth Bank report has detailed an expectation that 110,000 jobs are likely to be shed once the wage subsidy scheme closes on March 31.
JobKeeper was brought in at the beginning of the coronavirus pandemic and provided a fortnightly wage supplement of up to $1500 initially to workers.
It is now a maximum wage supplement of $1000 per fortnight.
The scheme was designed to keep workers linked to their employer and to prevent a mass shedding of jobs from the economic downturn sparked by COVID-19.
CBA said the calculated job losses would be in industries such as travel, accommodation and transport that are still heavily affected by virus restrictions.
Despite the losses, CBA believes the current strength of the labour market and increased spending levels would lessen the blow for the economy.
“Jobs in travel-sensitive sectors like transport, accommodation and arts and recreation look to be most at risk,” CBA said in its economic note.
“However, given the strength of the leading indicators of the labour market, we expect that the overall impacts on the labour market will be short-lived and any negative impact on spending will be minimal.”
CBA’s estimates are based on about 900,000 jobs by the end of March still being supported by JobKeeper payments.
The majority of the job losses would be in areas that were still financially ravaged from the pandemic and were only surviving because of government support packages, the bank flagged.
The Morrison government is yet to announce further support to industries still impacted by the pandemic.
CBA noted roughly a quarter of the businesses still receiving the subsidy were within its “high risk” category.
“We see transport, arts and recreation and accommodation and food services industries most at risk of job losses at the end of JobKeeper,” CBA said.
“These industries are sensitive to international travel and also suffer badly when restrictions and lockdowns are imposed.”
Economists are optimistic the recovery will mean the job losses will be minimal, with leading indicators showing other sectors of the economy have a rising number of new jobs available.
NAB’s latest business survey has found firms are still looking to hire new employees to meet the demand of rising activity, while Westpac’s leading consumer index has found more people believe unemployment levels are declining.
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