Daily Commentary BY THE CURVE TEAM –

Jobs Plummet in May

18th of June, 2020

Labour Force Data out yesterday saw another large reduction in employment, which poses significant challenges for the medium-term economic outlook. The data out for May showed a further 228 000 unemployed throughout the month taking the cumulative total reduction in employment since March to 835 000.

The unemployment rate rose to 7.1% and the participation rate fell to 62.9% as more people left the labour force. Accompanying the release was significant analysis from the Australian Bureau of Statistics on the impact of Covid-19. It showed how they have been handling people out of work as a result of the lockdown. Whilst the specific classifications are somewhat technical, the net result is that if all people out of work since March were actively looking for work the true unemployment rate would be 11.3%, which would be an increase of 1.55 million people.

Immediately after the release we also heard from Prime Minister Morrison and Treasurer Frydenberg. Morrison remarked once again at the heartbreak the lockdown has caused, where government action has forced people out of work and onto social security. Whilst the action was necessary to stem the spread of Covid-19, people’s livelihood, as he often refers to, have been significantly impacted.

In the questions after their remarks the Prime Minister once again stated the need for significant industrial relation reform but there is significant impediment to that, with the need for collaborations between a liberal government and the unions.

Just this morning Federal Education Minister Dan Tehan was reported as being set to announce significant changes to the federal funding arrangements for the university sector. The report indicated that the costs for degrees where there are shortages in the workforce i.e teachers, nurses, agriculture, would be significantly reduced. The opposite end of spectrum will see cost rises, i.e law, commerce, humanities.

Regardless of the merits of this type of program, for the economy to regain the lost ground from the lockdown, analysis and adjustment to all parts of government spending are needed. Targeted measures to educate the workforce and boost productivity are the bare minimum for a sustained recovery.

Matthew Dunshea

Client Relationship Manager