AMP Capital has estimated the number of jobs lost in May is likely to top 136,000, a smaller drop than the previous 594,000 casualties seen in the April ABS employment data. The further losses would cause the unemployment rate to then rise to 7.2 per cent, from 6.2 per cent in April.
AMP Capital anticipates the unemployment rate will rise to around 8 per cent in the next few months, as the risks linger for further rounds of jobs cuts from the loss of business incomes or another lockdown from a second wave of the virus spreading.
But the Australian economy could fare better than previously feared. Estimates that unemployment would rocket to 10 per cent by June are now being deferred, Crestone Wealth chief investment officer Scott Haslem noted.
“UBS now believes 10.5 per cent unemployment may be reached more gradually in late 2020, not June,” he said.
“CBA expects unemployment to rise by less – to only 9 per cent.”
Raised underemployment, unemployment ‘will keep wages low’
The latest ABS payrolls data released on Tuesday showed total payroll jobs fell by 7.3 per cent during the seven weeks from mid-March to early May.
The decline in payroll jobs slowed, with the drop being 0.2 per cent for the national payroll in the second half of April, compared to the previous five weeks when jobs fell by around 7 per cent, amounting to around 900,000 job losses.
However, as noted by AMP Capital senior economist Diana Mousina, payroll jobs are not the same as “employed” figures, with some people being on multiple payrolls. Around 6 per cent of those who are employed are said to have multiple jobs, particularly among younger people impacted by the pandemic restrictions.
ABS unemployment figures for April revealed unemployment rose to 6.2 per cent from its previous 5.2 per cent in March , while under-utilisation (a combination of the underemployment and unemployment rates) rose to a record high of 19.9 per cent.
“Labour market spare capacity will remain high for a while,” Ms Mousina said.
“And high spare capacity (people working less hours, more unemployment than otherwise) will keep wages low.”
Wages paid declined by 5.4 per cent over the seven weeks between 14 March to 2 May, but as JobKeeper subsidies kicked in, they had started to recover during the last two weeks. Wages paid increased by 0.9 per cent in the week to 2 May and 0.5 per cent the week before.
Like the Reserve Bank, AMP Capital has anticipated Australian GDP growth will see a 10 per cent contraction in the June quarter. But Ms Mousina said the hit to the economy could lighten if Australian consumer incomes are not as significantly slugged as previously expected.
“JobKeeper is allowing many people to remain attached to their employer (and therefore employed) and it’s unlikely that JobKeeper will be wound up before its end of September deadline,” Ms Mousina said.
“And by then, more businesses would have resumed trading, but not totally back to normal. Some improvement in the weekly job indicators is also consistent with better readings on job advertisements (although they are still much lower than a year ago) and increases in mobility indicators.
“This is to be expected as more businesses start to open up and means that there should be continued improvements in spending indicators and confidence from here.”
Mr Haslem noted while the data is in poor form compared to the previous standard for the Australian economy, the focus now is on when the losses will ease up.
“These are not typical times and [the] key to the shape of Australia’s (and indeed the world’s) recovery from this virus-induced recession is identifying turning points where things begin to become less bad,” he said.
Aussies eyeing a switch, but fears for future linger
Meanwhile data from ING Future Focus Report has shown that 3.3 million Australian adults are rethinking their career path, including 1.38 million millennials and 1.31 million people in Generation X.
But despite many wanting to change jobs, 32 percent of survey respondents said they expect opportunities to be very hard to come by and one in four (23 per cent) felt anxious or fearful about the prospects of finding work.
ING head of retail banking Melanie Evans said the crisis has seen many Australians question whether their existing skills will be needed in the future, while others have spent time dreaming about a change in direction.
“We’ve had a good run of booming job growth in Australia, so many millennials may have never experienced an economic downturn in their working careers. This could be why so many are taking the initiative to reassess careers and learn skills,” Ms Evans said.
She added millennials and those who fall into Generation X have also entered turning points in their lives where stable incomes are important – running through experiences such as marriage, children, home ownership and retirement planning.
More than a quarter (28 per cent) of Australians were found to be learning new skills while in isolation, whether in an attempt to progress their careers (17 per cent) or simply learning something new (11 per cent).
“There’s no denying Australians are nervous about what lies ahead, but our report reveals Aussies are being resourceful – using this time to plan for the future and upskill so they can move with the times,” Ms Evans said.
“The increase in learning will help people feel more optimistic about the future of work beyond COVID-19.”
The top 10 growing industries according to the report are biotech, pharmaceutical and life sciences; cyber security; healthcare; robotics; agriculture; renewable energy; sustainability and wellness; grocery delivery; EdTech (education technology) and online entertainment.
Financial coach, black swan risk manager, sustainability consultant, executive creativity coach and cyber security defender were named among the top 10 jobs of increasing demand. The last job on the list was nurse.
