Small guys warn of 500,000 jobs to go

MORE than 100,000 small businesses are likely to close nationally in the fallout from the coronavirus pandemic, costing about 500,000 jobs, an industry group has forecast.

And Australia is careering towards the deepest recession since the Great Depression as the outbreak intensifies, according to research by investment bank Goldman Sachs.

The warnings come as the big banks unveil sweeping support programs for small businesses, intended to shepherd those on the brink through the worst of the pandemic.

Council of Small Business of Australia chief Peter Strong told Business Daily the group expected 120,000 small and medium-sized businesses — those with annual turnovers up to $50 million — to close as the economy was up-ended.

That would be one in about every seven. About 500,000 workers in the sector, or one in every 10, were expected to lose their jobs, Mr Strong said.

The industry group based those forecasts on feedback from stakeholders, including the Business Council of Australia

and the Australian Banking Association, he said.

The Australian Industry Group welcomed assistance programs announced by the banks as extraordinary.

The cornerstone is a pledge to let ailing small businesses defer loan repayments for up to six months.

Australian Banking Association chief Anna Bligh said the package would apply to more than $100 billion in loans.

Depending on the take-up, it “could put as much as $8 billion back into the pockets of small businesses”, she said.

Meanwhile, big business also warned of catastrophe ahead.

Wesfarmers has warned shoppers are cutting back on clothing and other items as more ASX-listed firms abandoned their financial outlooks.

The Aussie conglomerate, which owns Bunnings, Kmart and Officeworks, said the uncertainty meant it could not estimate its impact on full-year financial results.

The grim picture comes despite some panic buying of essential items at Bunnings and Officeworks.

Troubled building materials firm Boral also suspended guidance and outdoor advertiser Oh!media entered a trading halt as did Crown Resorts.

Separately, a team of analysts led by Goldman Sachs Australia chief economist Andrew Boak forecast Australia’s economy would shrink dramatically this year.

Averaged across 2020, gross domestic product was likely to contract 6 per cent, they said.

“This represents the sharpest annual GDP contraction since the Great Depression,” they said.

They said the jobless rate, at 5.1 per cent last month, could hit 8.5 per cent.