Nearly a quarter of working Australians could be out of work in the coming weeks thanks to social distancing requirements to contain the spread of coronavirus.
The Grattan Institute has crunched the numbers and found that 14% to 26% of Australian workers - between 1.9 to 3.4 million people - could be out of work in the next few weeks if they haven't already lost their jobs, as a result of shutdowns and social distancing rules.
The report's lead author Brendan Coates said unemployment numbers could be the worst seen since the Great Depression.
"If our estimates are even close to accurate, Australia is facing either the worst or one of the worst economic downturns in its history. And there could be a ‘second wave’ hit to the economy even after the immediate health threat eases," he said.
"The latter figure would be the highest since the Great Depression in the 1930s," Mr Coates said.
Need somewhere to store cash and earn interest? The table below features introductory savings accounts with some of the highest interest rates on the market.
PremiumSaver (Amounts < $250k)
Everyday Savings Account
mySaver < $50k
WebSavings Account (New Customer) ($2,000+)
Rates based on a savings balance of $10,000. Sorted by total interest rate. Refer to providers' websites for bonus rate conditions. Note that the base rate will apply once the introductory term has passed. Rates correct as of August 10, 2022. View disclaimer.
He warned a quick recovery would be unlikely the longer restrictions continue.
"History tells us that recovery from periods of high unemployment is rarely fast," he said.
"This time may be different: recession has been deliberately engineered as a matter of public health, and substantial economic support is in place.
"But the longer the downturn goes, and the worse it gets, the less likely the labour market can spring back afterwards."
Unsurprisingly, the report found hospitality workers would be the hardest hit, with two-thirds of staff out of work.
The arts and recreation sector would also be significantly impacted, with over 50% of jobs lost.
"Younger Australians and women are also likely to be hit harder, because they are more likely to work in occupations and industries most affected by the shutdowns and spatial distancing measures imposed to slow the spread of the virus," the report said.
JobKeeper wage subsidy masking extent of unemployment crisis
The Morrison Government's $130 billion JobKeeper wage subsidy scheme "will disguise much of the impact of the crisis on employment" because those out of work will still be counted as 'employed' as they will still receive pay from their employer via the scheme.
"Using our preferred method of estimating the job shock, we estimate that about 3.43 million Australians could be out of work as a result of the response to COVID-19," the report said.
"If all of these people were classified as ‘unemployed’, the unemployment rate would rise to 30.2%.
"But not all the people who lose work as a result of COVID-19 will be classed as unemployed. Some who lose work will continue to be regarded as ‘employed’, because they will carry on receiving pay from their employer via the JobKeeper program even if they’re not at work."
Those forecasts don't factor in a 'second round' effect of the crisis on employment on other sectors that will occur as a result of reduced consumer spending.
Mr Coates said even those not directly impacted by the crisis will scale back their spending.
"Households not initially affected by public health measures will inevitably scale back discretionary spending and investment to preserve cash flow in case of an extended downturn.
"The more households are forced to rely on their own balance sheets to weather the costs of an extended shutdown, or repeated shutdowns, the worse these second round impacts will be."
Australian Council of Social Service (ACOSS) CEO Cassandra Goldie said the government needs to support people back into jobs so that no one is left behind.
“We must learn from lessons of the past. We know from past experience that when someone is unemployed for over a year, their chances of securing paid work typically fall by 40%," Ms Goldie said.
"We need a strong commitment from government to invest in job-generating infrastructure and services, and from employers to give people a fair chance of a job regardless of how long they’ve been unemployed, how old they are, and whether they have a disability.
“Instead of throwing up barriers to income support like denying payments to people with a small amount of savings, or imposing Work for the Dole and unrealistic job search requirements; the government should meet its own obligations to secure employment for people."
Ms Goldie said the increase in the Newstart payments, now called 'JobSeeker', should be permanent.
"We can never go back to the low rate of the old Newstart payment of just $40 a day or the punitive approaches that punished and demonised people locked out of paid work," she said.
"We need to raise the rate for good so those without paid work can cover the basics – food, housing, electricity – and they can make the most of job opportunities as the economy rebuilds."
- CBA results: Borrowers at capacity increase, large swing back to variable-rate home loans
- Guide to AMP’s Savings Account
- How have rising interest rates impacted consumer confidence this month?
- Household spending continues to rise in June: ABS
- Frollo pulls the plug on controversial screen-scraping methods