JobKeeper 2.0 buys time for businesses and employees to rebuild

JobKeeper proves its worth in one of our toughest times, says Josh Frydenberg

THE coronavirus pandemic has hit the Australian economy harder than any event in 100 years.

From February to May, more than two million people lost their jobs or had their working hours reduced. While the official unemployment rate is 7.4 per cent, the highest in more than 20 years, the effective unemployment rate is 11.3 per cent once those who have left the workforce or had their working hours reduced to zero are taken into account.

As restrictions are eased and the economy opens up, more people will find work. But for those locked down in Victoria or in sectors heavily dependent on open borders such as tourism, aviation or international education, the labour market will continue to be very tough.

It is against this backdrop the government has decided to extend JobKeeper for another six months until March 28.

Initially legislated for six months ending September 27, JobKeeper has been a lifeline for more than 960,000 businesses and not-for-profits. It has supported 3.5 million workers including 60,000 from Tasmania, full-time and part-time, long-term casuals and sole traders. According to a Treasury review, JobKeeper has fulfilled its objectives: to save jobs and business; maintain formal connection between employers and employees and provide income support.

At an estimated cost of near $16 billion, JobKeeper 2.0 will provide a two-tiered payment at a new rate depending on hours worked. From September 28 until January 3, payments will be $1200 and $750, with the lower payment for employees who worked less than 20 hours a week in February. From January 4 to March 28, the payments will be $1000 and $650.

In the initial phase, eligible businesses needed a reduction in turnover of 30 per cent or 50 per cent depending on their size. This test remains the same, but it will be reapplied both at the end of September and at the start of January, with businesses having to demonstrate to the ATO that their turnover has not recovered above the threshold.

Consistent with the gradual improvements across the economy, it is Treasury’s expectation that the number of JobKeeper recipients will reduce substantially with about 1.4 million eligible recipients in the December quarter and one million in the March quarter. We know the economic pain caused by COVID-19 will eventually end and many businesses now struggling to survive will be viable again. This is why JobKeeper is being extended,

to buy time for those businesses and employees.

With ABS data showing that 44 per cent of businesses receiving JobKeeper said it influenced their decision to keep staff on, it has provided much-needed confidence and economic support.

Key to its success has been flexible workplace arrangements. With health restrictions forcing closure of some businesses and reduced activity in many more, the government passed legislation that would enable employers in JobKeeper businesses to be able to modify hours, duties and location of staff, for example, moving a staff member from sales duties in the showroom to stocking shelves in the warehouse.

More than half employers surveyed said they had made use of flexible arrangements.

With JobKeeper going for another six months, the labour market remaining weak and health restrictions, there is a compelling argument for these arrangements to continue.

This applies equally to businesses transitioning off JobKeeper or who remain on in the next phase. As part of the comprehensive economic response, we have also introduced a fortnightly $550 coronavirus supplement.

It is helping to cushion the blow for about two million people on income support.

The government will continue to provide the supplement of $550 until September 24, and from that date to December 31, it will be $250 per fortnight. The government will increase the income-free area from $106 to $300 a fortnight, which will allow a JobSeeker recipient to earn up to $1256 a fortnight and receive the $250 supplement in full.

We are providing greater opportunities to re-skill and re-train with a $1 billion Skills for Recovery Fund with the states to provide up to 340,000 training positions. This is on top of a $1.5 billion apprentice wage subsidy scheme to support 180,000 apprentices.

JobKeeper is the largest economic measure Australia has ever introduced and has supported about 30 per cent of the pre-COVID private sector workforce.

It’s been a great success at one of the most difficult times in Australia’s history. Its continuation will help ensure Australians are supported in their time of need.