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03/06/2020
Summary
- COVID-19 and resulting social restrictions have already had a dramatic impact on the labour market. This is most evident in indicators like hours worked, which fell 9.2 per cent in just one month, a much larger fall over a shorter period than previous recessions.
- The unemployment rate has not risen as much as expected, increasing one percentage point over the last month. This is due to many workers being classified as employed while receiving JobKeeper. In addition, many people have stopped looking for work with the participation rate dropping 2.5 percentage points.
- Industries such as accommodation and food services and arts and recreation have been the most adversely impacted to date. The concentrated impact in these industries has seen young people and women suffering most. For example, the number of young people in full time education and part-time work fell back to 2015 levels. Hours worked by women fell 11.5 per cent in April compared to 7.5 per cent for men.
Key indicators
Employment rates in Australia
The employment rate shows the number of people employed divided by those who are in the working age population (those aged between 15-64). Department of Employment (DESE) estimates of the employment numbers registered a fall from 74 percent in March to 71 percent in April.
The employment to population ratio is an estimate of the utilisation of the human resources in the economy. It is expressed as the number of people employed divided by the total population of the country. This fell from 62.2 in March to 59.6 in April.
Unemployment rate - Australia
The unemployment rate was steady at between five and 5.2 percent in the months leading up to the economic downturn. The latest numbers show that this has increased to 6.2 per cent in April.
Weekly Jobs and Wage indicators
Payroll jobs
The first signs of economic slowdown came in March when the restrictions were introduced. Social distancing and shutdowns across states had an impact on the overall employment levels. The Jobs index (with jobs indexed to 14 March 2020) shows a slowdown in jobs from late March.
The wage index, with wages also indexed to 14 March 2020 levels, shows a drop in wages from the end of March onwards and this has started to rebound more recently. In particular some groups seem to have gained over the last few weeks with women under 20 experiencing a 22 per cent increase in their wages since March 14 2020.
Industry by Industry slowdown
There is no doubt that the virus has affected some parts of the economy more than others. For example, Accommodation and Food services experienced some of the largest falls in workforce (since March 14), as did Arts and Recreational Services, and Rental, Leasing and Real estate businesses.
Wages declined across all industries, however mining, manufacturing and wholesale trade have also been amongst the hardest hit sectors.
Impacts on younger workers
Younger workers are likely to be the worst affected by the economic crisis that results from the pandemic. Young people are more likely to work casually in jobs that are highly affected by the virus restrictions - retail and accommodation and food services sectors.
This sections presents seasonally adjusted charts that should be interpreted with some caution as the ABS is yet to release seasonally adjusted data. Our estimates of the seasonally adjusted data are done using multiple seasonal decomposition.
The number of young people in full time education and part time work dropped significantly to almost 2015 levels. However, it could be the case that some of these respondents are receiving Jobkeeper or Jobseeker and that when the economy rebounds, they could find themselves back in employment again.
While full-time workers have dropped a little bit since the previous period, there has been a significant drop in the number of part-time workers and this drop appears more pronounced for women than it is for men.
The number of young people who were not in the labour force has increased markedly especially over the last month. This could be because those who have been stood down as a result of the coronavirus shutdown are receiving Jobseeker or Jobkeeper, and are expecting that their work will resume as restrictions are lifted.
Another key vulnerable population are those who are not in the labour force or in education. This number has in the last month increased to extremely high levels. Some of the increase could be very temporary and might readjust again once students start going back to trades and apprenticeships. These numbers will definitely be ones to watch in the coming months.
Those who were not in the labour force and who weren’t looking for work also increased to extremely high levels. It remains to be seen how well these numbers will rebound once the crisis abates and the economy starts to return to a new normal.
These charts paint a pretty bleak picture for younger workers. Even with the wild swings in the underlying data, there is no doubt that younger generations will bear the brunt of the effects of this downturn. They’re more likely to be working in casual jobs, less likely to have built up reserves of savings and, given the higher face to face contact in the jobs younger people work, will be among the last group to find their way back to employment. The labour market scarring (the negative impacts on one’s career from being in unemployment early on) can be more pronounced for younger age groups.
CEDA will continue to monitor the impacts on your people as well as other groups bearing the brunt of the jobs impact such as women.