Although we now live in a world full of uncertainty, there was always one certainty – Jobkeeper could not have lasted forever. Changes announced in August mean that the $1 500 fortnightly payment that supported our economy during this downturn will be reduced and phased out by next year (assuming the program ceases).
Firstly, a new reference date has been declared between the 1 of July and 3rd of August to assess the payment scheme a particular worker will fall under whether they have worked more than 20 hours per week on average in this period.
Phase 1 will last between 28th September 2020 and the 3rd of January 2021 and involve, those who worked more than 20 hours receiving $1 200 per fortnight payments whilst those who worked below 20 will receive $750 per fortnight.
After this phase between the 4th January 2021 to 28th March 2021, those above 20 hours will receive a discounted rate of $1 000 and those below 20 hours will receive $650.
To be eligible for JobKeeper payments businesses must prove that their turnover has declined by a certain percentage given its size. The breakdown follows as below:
- 50% for business with aggregate turnover more than $1B
- 30% for business with aggregate turnover less than $1B
- 15% for charities and not for profits
Some landmark statistics help contextualise the circumstance and illuminate the positioning of this program extension and intention to restore the following:
- Economic growth -7% June Quarter
- Unemployment 7.5%
- Inflation -0.3%
Economists have praised the success of Jobkeeper due to its effectiveness in doing just so – “keeping jobs”. Although this can be argued, another argument is gaining increasing traction within the landscapes of Australian economic commentary – the stimulus has not saved jobs, rather in actual fact has created a facade over the true rate of unemployment. Some estimates have suggested that unemployment would have reached 11.2% if JobKeeper was not brought in, whilst others argue that this behemoth is already in existence within the Australian employment landscape, disguised by the current statistics that do not truly represent the current labour market.
In essence, this argument suggests that JobKeeper is merely delaying the inevitable, that is, businesses who will not be able to compensate their workers will eventually no longer employ their workers. However, it is hoped that the health crisis of COVID subsides by the end date of the JobKeeper extension, as we will bear the fruits of continued employee and employer ties, with a “continue where we left off” circumstance rather than a process of job shedding, rehiring and training which will only increase cost and delay the timeliness of the economic recovery.
Here lies a common tune woven throughout Echo articles in recent times, although with the official statistics released, we are now officially in the chorus – a recession!
John Maynard Keynes vindicated the need for fiscal stimulus to replace declining consumption levels during the great depression. Aligned with this outlook, modern day governments across the world have brought this into fruition through aggressive stimulatory measures – a reality that the International Monetary Fund has carefully advocated for, whilst noting that record budget deficits must be financed in the future.
Albeit highly costly, fiscal stimulus has proven to be effective in Australia’s case, particularly when applying a relative lens of analysis. Let us cast our eyes over to the United Kingdom who in the second quarter of 2020 have experienced GDP declines of -20.4% alongside the United States with a staggering -31.7%. In light of these, Australia’s -7% could be argued as an effective testament to timely and vigilant policy reforms.
Those who are less likely to rely on a Jobkeeper tend to be the highly skilled upper quintile, thus, by providing wage subsidies to groups within society, this effectively reduces the potential threat of income inequality which would have been cultivated by higher unemployment rates within lower quintiles.