The Reserve Bank has cut rates twice this month as fears of the economic impact of the coronavirus intensify. The historical rate cut came just hours after the ABS announced that while the unemployment rate remains steady, the reference period pre-dates the notable increases in confirmed cases of COVID-19 in Australia.
Australia’s trend unemployment rate remained steady at 5.1 per cent in February 2020, from a revised January 2020 figure, according to the latest information released by the Australian Bureau of Statistics (ABS) on Thursday.
But while the figure has remained flat for a third consecutive month, ABS chief economist Bruce Hockman alluded that things could change next month when the increasing number of COVID-19 cases are taken into account.
Financial pundits are predicting the unemployment rate will spike and fast.
In announcing its revised forecasts for 2020, Westpac said that it foresees a deeper recession and a 7 per cent unemployment rate.
The lender’s chief economist, Bill Evans, described 2020 as a “severe disruption or technical recession to differentiate from the last two recessions in Australia when the unemployment rate spiralled from 6 per cent to 11 per cent”.
“The unemployment rate is now forecast to reach 7 per cent by October 2020 due to the larger negative shocks to the labour-intensive sectors such as recreation, tourism, education, renovations and additions, and dwelling construction,” Mr Evans said.
“This lift in the unemployment rate is despite reducing the participation rate from 66.1 per cent to 65.4 per cent as a discouraged worker effect — that is, as workers respond to a deteriorating labour market the participation rate is likely to decline.”
Qantas slashes staff
On Wednesday, Qantas and Jetstar announced they’re standing down two-thirds of their workforce until at least the end of May as the coronavirus grounds flights.
“The reality is we’ll have 150 aircraft on the ground and, sadly, there’s no work for most of our people. Rather than lose these highly skilled employees who we’ll need when this crisis passes, we are instead standing down two-thirds of our 30,000 employees until at least the end of May,” said Qantas Group CEO Alana Joyce.
While Qantas has said that employees will be able to draw down on annual and long service leave and additional support mechanisms will be introduced, periods of leave without pay for some employees are inevitable.
“Most of our people will be using various types of paid leave during this time, and we’ll have a number of support options in place. We’re also talking to our partners like Woolworths about temporary job opportunities for our people.
“This is a very hard set of circumstances for our people, as it is for lots of parts of the community right now.”
Maja Garaca Djurdjevic is the editor of My Business.
Maja has an extensive career as a journalist across finance, business and market intelligence. Prior to joining Momentum Media, Maja spent several years unravelling social, political and economic intricacies in Eastern Europe.
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