Westpac chief economist, Bill Evans, believes that it could take many years for Australia’s unemployment rate to return to its pre-COVID level:
“The biggest story for recessions is always around the labour market.
“If we look at the early 1980s recession it took six years for the unemployment rate to get back to the pre-recession level, in the early 90s recession it took 15 years to get back to the pre-recession level and even in the GFC which wasn’t a technical recession, but it was obviously a contraction in one quarter and very weak world economy, after 12 years we still hadn’t got back to that four per cent unemployment rate.
“So the big concern with this recession is that, will we have this long painful period where the unemployment rate remains elevated?
“Our forecast is that the unemployment rate will peak at around 8.4 per cent in August, eight per cent by the end of the year, but still holding at seven percent by the end of 2021.
“We’re only expecting the economy to rebound by around three per cent and what that will mean is that by the end of 2021 the economy will still be operating at a level which is going to be lower than we saw at the end of 2019.”
Mr Evans said that in the last few months there has been a reduction in jobs of 830,000, but that 623,000 people also left the labour market in that time – which would otherwise have raised the unemployment rate to 11.3 per cent.
He said that the next big challenge for the economy will be unwinding the JobKeeper and JobSeeker packages.
As we know, Australia’s youth have been hardest hit by the COVID-19 recession.
The labour underutilisation rate for Australians aged between 15-24 years old surged to a record high 37.8% in May:
Which follows a 12.4% annual decline in the number of jobs:
Accordingly, young Australians are facing another ‘lost decade’, which follows hot on the heels of last decade’s broader income freeze:
One has to wonder why Bill Evans is seeking to return immigration back to its pre-COVID levels, thus pitting foreign workers against locals.
In doing so, he is waging a direct war on Australia’s youth.
