In its first six months, JobKeeper supported around 3.5 million workers in more than 900,000 businesses, and undoubtedly played a crucial role in cushioning the decline in employment and incomes over the first half of 2020, the RBA said.
The RBA conducted a study to estimate the contribution of JobKeeper to stemming employment losses during the first few months of the scheme.
The study found that one in every five people who received the JobKeeper payment and, thus, remained employed would not have stayed employed during this period without JobKeeper.
Further, at the national level, JobKeeper prevented at least 700,000 additional employment relationships from being lost in the short-term.
The study estimated that without JobKeeper, employment would have fallen by twice as much as it did.
However, the RBA made it clear that the study looked into how JobKeeper supported employment in the first few months of the program and doesn’t consider the effects from August 2020 onwards.
The authors of the RBA study, James Bishop and Iris Day, said policymakers should not assume that the short-term effects of the scheme will necessarily persist.
“The international evidence suggests that wage subsidies, if kept in place for too long, can have adverse effects on incentives and get in the way of necessary labour force reallocation,” they said.
“In addition to keeping existing employment relationships intact, another key objective of JobKeeper was to provide income support to business owners and their workers. We do not look at this important aspect.”
Mr Bishop and Ms Day also noted several assumptions in the study, some of which are potentially important and should be kept in mind when interpreting their findings.
For example, they point that the study’s conclusions are based on the experiences of a group of casual employees with fairly short job tenures, who may have responded differently to JobKeeper than other groups of workers.
They also noted the study assumed that JobKeeper did not have a material effect on those people who did not receive the payment.