Poverty, profits and the pandemic

February 23, 2021
Despite the lack of jobs and wages growth at an all-time low, the government still plans to cut JobSeeker.

“The economic recovery is well underway,” federal Treasurer Josh Frydenberg said in January. “Eighty-five percent of the 1.3 million Australians who either lost their jobs or saw their working hours reduced to zero at the start of the pandemic are now back at work.”

It’s true that company profits and house prices are booming. But, at the same time, wages continue to stagnate and the outlook for those who work in tourism, higher-education and the media and telecommunications, remains bleak.

Compounding the uncertainty for those missing out on the “recovery” is the fact that the federal government will withdraw JobKeeper (a wage subsidy to some businesses, now reduced to $500 per week per employee) and most of the Coronavirus supplement to JobSeeker (now only $150 per fortnight), at the end of March.

JobKeeper withdrawal

There are 1.5 million workers relying on JobKeeper, according to Sabra Lane, who spoke to federal Treasurer Josh Frydenberg on  February 15 for the ABC Radio AM program. “What these numbers show is a broad-based recovery in the Australian labour market, with over 2 million having graduated from JobKeeper,” Frydenberg said.

Focusing solely on the positives (including booming house prices, consumer confidence and motor vehicle sales), Frydenberg said the situation was “very encouraging”.

“Ninety percent of the 1.5 million Australians who lost their job are now back at work,” Frydenberg said. That still leaves unemployment at 877,600 in January, according to the Australian Bureau of Statistics (ABS); 156,000 or 21% higher than in January 2020.

Frydenberg’s optimism aside, the ongoing fragility of the economy remains concentrated in certain sectors. ABS “payroll jobs” figures for January, show that the number of jobs in education and training fell by 12% from  last March 14 to  January 30.

Jobs in accommodation and food services (which includes tourism) fell by 11.5%. Meanwhile, jobs in transport, postal and warehousing (which includes airlines) fell by 6.3%, while the fall in aggregate wages was more than 10%.

“JobKeeper and JobSeeker have been the backbone that held our economy together during the pandemic and to cut them while entire sectors are still feeling the effect of the crisis is short-sighted and dangerous,” Australian Council of Trade Union president Michelle O’Neil said on February 18.

“Genuine recovery from the pandemic recession will require comprehensive support, job creation and wage growth … 1.5 million people still rely on JobKeeper to keep them in work, they face an uncertain future once the program is cut at the end of March.”

The Australian Services Union is calling for the extension of JobKeeper to the airline industry, to prevent its collapse. Through its “Keep Australia Flying” campaign, it is calling on the federal government to introduce Aviation Keeper.

Industry groups, including the Tourism and Transport Forum, are also calling for an extension to JobKeeper, at least for those industries which have been severely damaged by the pandemic. “Without a “systematic” approach to the crisis”, Margie Osmond, its spokesperson said on January 19, “this time next year we won’t have much of a tourism industry left”.

The withdrawal of JobKeeper will lead to increased joblessness. Even Philip Lowe, governor of the Reserve Bank of Australia, has admitted as much, but argues that its impact will be short term. However, the tourism industry predicts up to one third of operators may either shed staff, or be forced to close their doors permanently, once JobKeeper payments finish.

JobKeeper boosts profits

While it has been a lifeline for many workers, JobKeeper has nevertheless also created a boom in profits for many businesses.

“We’ve seen quite a few Australian companies who are still in receipt of JobKeeper, reporting 20, 30, 40% improvements in profit,” Dean Paatsch, director of Ownership Matters told ABC Radio National's The Money on February 18.

As for private companies (not listed on the stock exchange) Paatsch said: “I know lots of people in the construction sector who have had a very good pandemic. There’s lots of JobKeeper utes running around; there’s lots of JobKeeper boats. My accountant told me of a JobKeeper holiday house that he believes is under construction.”

JobSeeker supplement to get the axe

The government had been at pains to talk up the end of the JobSeeker supplement at the end of March, threatening to reduce unemployment payments to the Newstart rate of $40 a day.

But on February 23, as if to deflate the growing pressure, Prime Minister Scott Morrison announced that its changes to JobSeeker from April would include raising unemployment benefits by an extra $25 per week.

Sound generous? Hardly. It is still planning an effective cut of $100 per fortnight on the amount people are currently receiving with the supplement. It means that rather than try and survive on $40 a day (the old unemployment rate), those without work will be trying to survive on $43 a day. This is the government’s “generous” increase to the permanent rate of JobSeeker after the pandemic supplement is withdrawn.

According to the ABC, this $3 a day increase comes with the requirement recipients undertake more job searches per month and face-to-face appointments with employment services.

The Guardian Australia has reported that any increase in JobSeeker will also likely be at the expense of various supplements (medication, transport and education), worth hundreds of dollars a year to many welfare recipients.

The withdrawal of JobSeeker will have a significantly greater impact on the poorest regions of the country. “Overall, about $300m could be lost each fortnight among the 2 million people on jobseeker, student and parenting payments who receive the supplement”, according to the February 10 Guardian. “That includes about $195m that goes to jobseeker payments for the 1.3 million people on unemployment benefits.”

The RBA governor has said an increase to the base rate of JobSeeker is justified on fairness grounds. The Business Council of Australia, representing the largest corporations in the country, has supported an increase in unemployment benefits, but did not say by how much.

Cassandra Goldie, spokesperson for the Australian Council of Social Service, said there needs to be an increase in the permanent rate of JobSeeker to at least $65 a day — up from the projected $43 ($910 a fortnight).

“At just $51 a day [with the supplement], the current rate of JobSeeker is clearly not enough with people again unable to pay their rent, skipping meals, and afford essential bills.

“We have an obligation to make sure that anyone hit by unemployment, whenever that occurs, at least has enough to meet their essential costs and live with dignity so they can begin to rebuild their lives,” Goldie said.

Wage growth at all-time low

For those of us still working, the outlook for wages is not so rosy either. ABS figures for the July to September quarter, released last November, show that wages across the board increased by only 0.1% over the three months, down by roughly 80% from just one year earlier.

The minutes of the RBA Board’s February meeting indicate just how bad things are: “Members observed that wages growth had been subdued for a number of years and had recently declined further, to the lowest levels in at least 2 decades,” they noted.

Many governments and businesses had instituted wage freezes, which had hammered overall wage growth, the RBA minutes continued. And while there may be some increases expected in private sector wages, “state governments had announced measures to cap wages growth at rates below those seen in recent years”.

In short, the “recovery” of the Australian economy from the COVID-19 induced recession is uneven, to say the least.

While a minority have had a good pandemic, with historically-low interest rates inflating house prices and JobKeeper rorting increasing profits, the rest of us continue to lose out.

Whether you’re working for a wage, subsisting on JobSeeker or fretting the imminent loss of JobKeeper, the economic outlook for working people is uncertain. For those working in the airline industry, tourism, live music and elsewhere it may about to become impossible.

You need Green Left, and we need you!

Green Left is funded by contributions from readers and supporters. Help us reach our funding target.

Make a One-off Donation or choose from one of our Monthly Donation options.

Become a supporter to get the digital edition for $5 per month or the print edition for $10 per month. One-time payment options are available.

You can also call 1800 634 206 to make a donation or to become a supporter. Thank you.