Is the coronavirus recession really over?

Photo: Niek Verlaan on Pixabay

“Technically, Australia’s recession may be over”, chirped federal Treasurer Josh Frydenberg on December 2, as the quarterly account figures released earlier that day showed that the economy had grown by 3.3%. “But Australia’s recovery is not”, he added, almost as an afterthought.

While larger than expected by many economists, the growth between July and September came on the back of a 7% contraction over the previous three months.

According to the Australian Bureau of Statistics (ABS), the economy actually contracted to be 3.8% smaller than it was between the end of September 2019 and this September, a fact not readily shared by the Murdoch media and Channel 9.

The September quarter growth did not even account for half the contraction in the economy over the previous three months. While the economy may have grown, unemployment did not fall. ABS employment figures for September, released on October 15, showed that unemployment rose by more than 11,000 in the month, to more than 937,000.

In October, unemployment grew again by more than 25,000, to 960,000 — 7% of the workforce.

Perhaps the recession is not over, at least not for everyone.

Underemployment (those working some hours but not as many as they would like) also rose in September, from 11.3% to 11.4% of the workforce.

ABS figures for October show that the rate of underemployment fell from 11.4% to 10.4%, largely because the COVID-19 restrictions were lifted in Victoria, allowing retail and hospitality workers to lift their hours of work.

The impact of the pandemic lockdown on working people’s living standards has been somewhat cushioned by the federal JobKeeper and JobSeeker programs.

Initially, the JobKeeper scheme paid businesses that had experienced a substantial loss in revenue $1500 a fortnight as a wage subsidy for each worker (except short-term casuals). At the end of September, that subsidy was cut to $1200 a fortnight and it will be cut again to $1000 a fortnight at the end of December. The payment will end altogether at the end of next March.

While JobKeeper was correctly criticised for excluding significant groups of workers (university workers, workers in the arts, “temporary” migrant workers and short-term casuals), it did keep many out of poverty.

The government’s expectation is that by the end of next March, COVID-19 restrictions will have eased so significantly that the economy will rebound. The majority of businesses that were forced to close their doors will reopen and workers will return to work.

Frydenberg said on December 2 that the government would consider “targeted support”, but “macro supports like JobKeeper” are “tapering down”.

Greg Jericho criticised the government’s approach in the December 6 Guardian. He noted that there are 462,000 more people who are underemployed or unemployed now compared to March. He criticised Frydenberg for saying, “all along we have been talking about a private sector-led recovery” because “government is not the solution”.

The JobSeeker program initially paid unemployed workers a supplement of $550 a fortnight, doubling the rates of the Newstart payment from April. In September, the supplement was slashed to $250 a fortnight, with a further cut expected from the end of December, to just $150 a fortnight. The government has said this supplement will continue until the end of next March, at which time unemployed workers’ allowances may drop back to no more than $40 a day.

The cuts to JobSeeker will disproportionately affect the already disadvantaged.

“The worst affected [localities in NSW] will be around Fairfield in Sydney’s west where almost 11,000 people or almost 3 per cent of the state’s JobSeekers live”, according to the November 28 Sydney Morning Herald. “There are another 5300 people on JobSeeker in nearby Liverpool and more than 6000 in Bankstown.”

Anglicare’s national survey of people receiving Centrelink payments showed that the impact of the JobSeeker supplement halved the percentage of people living on $7 a day after paying rent. Many were also able to relocate into more secure housing.

Anglicare spokesperson Kasy Chambers said on December 8 that the gains made from the JobSeeker increase will be put at risk if the government goes ahead with its planned cuts. “It is time to raise the rate for good and make sure that everyone can live in dignity while they search for work.”

Not everyone is doing it tough, however.

Company gross operating profits rose by 18.6% in the year to the end of September, according to the ABS. Wages rose by just 0.4% over the same period.

Housing prices are also growing again, boosted by record-low interest rates and buoyed by generous tax incentives, including negative gearing and capital gains tax concessions.

“Median prices are higher than they were 12 months ago in every city other than Melbourne”, according to propertyupdate.com.au.

This comes as those in insecure work have seen their jobs disappear and incomes tumble. There has also been a seismic transfer of wealth over the pandemic period: this year the richest 200 Australians increased their collective wealth by $72 billion to $424 billion, with iron ore magnates Gina Reinhart and Andrew Forrest scooping the pool.

Yes, Mr Frydenberg, the “coronavirus recession” is over, but only for some. For the rest of us, stagnating wages, insecure work and dwindling government benefits remain our stark reality.

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