The evidence that is mounting is allowing researchers to better assess the damage that is emerging from the way in which we are dealing with the coronavirus. One of the important questions that will determine the future trajectory of our economy relates to how many workplaces have disappeared altogether as a result of the businesses disappearing forever as a result of the flow-on impacts of the compulsory lockdown. Last week (July 14, 2020), the Australian Bureau of Statistics released their latest employment data taken from Australian Tax Office data – Weekly Payroll Jobs and Wages in Australia, Week ending 27 June 2020. They have slowed the release cycle on this data (for reasons they have not disclosed), so it is a month since I have analysed it. The latest data covers the period up to June 27, 2020. The monthly labour force data released last Thursday for June 2020, covers a period that ends around June 12, 2020, so the payroll data provides a more recent snapshot of the state of affairs – an extra three weeks. As the enforced restrictions were eased, payroll employment recovered somewhat and by the end of June is now 5.7 per cent below the March 14, 2020 levels. It appears though that, while part-time work has recovered, full-time work continues to decline. Examining the age profiles of the recovery demonstrates that prime age workers have not enjoyed a commensurate recovery. The two observations are linked and are suggestive of the impacts of the initial damage have now permeated the supply chain and employment losses are spreading outside areas initially most impacted by the lockdown. So my prediction in March that many businesses will disappear because the fiscal support by the government was inadequate and poorly targetted in terms of protecting jobs is looking like being validated by subsequent data. But it now seems that the recovery in employment will be protracted given how many jobs have been lost to date and the renewed lockdowns in Victoria. A much larger fiscal intervention is required and it has to be directed at workers rather than firms and support direct job creation....Karl Popper famously said, "All life is problem solving." Economists would likely add, "All life involves tradoffs (opportunity cost).
The present chanllenge is overcoming the pandemic while tanking the economy as little as possible. Those are somewhat contradictory aims that are at cross-purpose.
As far as I can see, most people and the media have not yet though this trhough and are somewhat in denial of what is in store as a result of myopia.
This is a huge challenge and most nations have not committed to doing what it takes, even though this the crisis of our time (so far). It dwarfs the GFC, for example, and although that was a major crisis, it didn't kill a mass of people outright.
China is a notable exception among nations, especially large ones, where managing crises is more challenging. China is doing what it takes on the health front to quarantine the virus, and it is also taking fiscal measures to support the economy. Harsh, one one hand, and bold, on the other, but so far, apparently rather effective by comparison.
Bill Mitchell – billy blog
Latest Australian payroll data suggests employment damage from shutdown is worse than thought
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia
1 comment:
This virus has caused an outbreak of mass hysteria that puts the Orson radio broadcast to shame. Yet in much of the world, it has had little impact on people's psychology.
The economic impact is real, and may be devastating in the third world. And for what? Lockdown has failed, vulnerable groups are dying (in Canada's nursing homes, they were literally sacrificed through incompetence), and millions may face starvation.
A truly lemming moment.
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