The latest data from the Australian Bureau of Statistic has revealed that a total of 594,300 people lost their jobs in April alone, with hours worked dropping at a record pace.
Bjorn Jarvis, head of labour statistics at the ABS, explained that the unemployment rate didn’t see a proportionate spike because of a huge drop in people currently looking for work.
As such, unemployment increased by 104,500 people to 823,300 last month, lifting the rate by 1.0 percentage point from 5.2 per cent to 6.2 per cent.
“The large drop in employment did not translate into a similar-sized rise in the number of unemployed people because around 489,800 people left the labour force,” Mr Jarvis said.
With a larger than usual number of employed and unemployed people leaving the labour force, the participation rate, too, suffered an unprecedented fall by 2.4 percentage points to 63.5 per cent.
“This means there was a high number of people without a job who didn’t or couldn’t actively look for work or weren’t available for work,” Mr Jarvis noted.
The impact of the COVID-19 pandemic on hours worked was also extensive, ABS data revealed.
Total hours worked fell by around 9.2 per cent in April, meaning that, when taken together with people leaving the workforce, around 2.7 million people either lost their job or had their hours reduced between March and April.
As a result, the number of underemployed people also rose sharply, up by 603,300 people to a total of 1.8 million people, with the rate spiking to another record-high 13.7 per cent.
Job ads down
Concurrent with unemployment data, SEEK revealed that job ads posted with the platform were down by 65.6 per cent on the year in April, and 49.9 per cent compared with March.
Retail and hospitality were the industries hardest hit in April due to the significant restrictions imposed on their licence to operate, with month-on-month job ad declines of 55 per cent and 59.6 per cent, respectively.
Looking at the statistics across states, New South Wales and Victoria once again emerged as the most impacted by the pandemic, showing month-on-month declines of 52.4 per cent and 56.3 per cent compared with March 2020.
‘Figures not surprising’
Commenting on the latest statistics, CreditorWatch CEO Patrick Coghlan said the “catastrophic” figures were expected.
“We always knew that April’s data was going to be catastrophic, particularly in the SME space where small to medium businesses were suffering from problems long before the coronavirus lockdown measures began,” Mr Coghlan said.
He revealed that according to CreditorWatch data, businesses were suffering from cash-flow problems well before the COVID-19 crisis and are in for a “tough ride” over the next 12 months.
Mr Coghlan said: “SMEs have the September milestone ahead, whereby the government’s temporary changes to safe harbour come to an end.
“The end of this period will essentially be a litmus test and will clearly identify those businesses that have come to be known as ‘zombie companies’, those that were facing financial trouble prior to COVID and have been taking advantage of the pandemic’s legislative changes in the meantime while essentially hibernating for six months.”
However, despite the challenges, Mr Coghlan is hopeful that by June, things will start looking up.
“I am hopeful that by June, we’ll start to see the government’s stimulus money working its way through the economy,” Mr Coghlan said.
“We’ll also see a subsequent uptick in business activity as restrictions start to lift and Australia’s labour force gets back to work.”