New government figures show that more than 90,000 people have come off welfare benefits since JobKeeper ended in late-March. The stronger than expected recovery also means that the federal government now expects the final cost of the JobKeeper scheme to be about $88.8 billion, down from the October 2020 Budget’s forecast of $101.3 billion:
Josh Frydenberg said the figures — in which at least 30,000 people came off welfare benefits in the week ending April 30 on top of 63,000 in the first weeks of the month…
The Treasurer said on Sunday that while 93,000 people were off benefits and job advertisements were at record highs, there was still work to do to secure the post-COVID recovery.
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Late last month, Roger Wilkins from the Melbourne Institute of Applied Economic and Social Research forecast that Australia’s unemployment rate could spike above 7% from April due to the ending of JobKeeper alongside harsher mutual obligation requirements applying to JobSeeker and the Youth Allowance:
The result is likely to be an increase in the labour supply — more people looking for work…
More people looking for work means more people counted as unemployed…
The removal of JobKeeper and other economic headwinds mean employment growth is not likely to be strong in coming months.
This means that, for the unemployment rate not to rise significantly, more people will need to leave benefits and exit the labour force than stay on them and search for work.
This does not seem likely. It means we should not be surprised if the unemployment rate climbs back up above 7% within months.
We know from Indeed’s latest job postings data, released last week, that there are now 43% more jobs on offer than there were immediately before the pandemic:
As noted by Indeed’s Australian economist, Callam Pickering:
The end of the JobKeeper wage subsidy on March 28 does not appear to have any impact on hiring trends nationally…
Strong postings figures, if they persist, would point to strong employment gains in the coming months.
Thus, it appears that concerns about of unemployment spike post JobKeeper are not warranted as Australia’s labour market continues to power ahead.
Hopefully, the strong hiring conditions and tighter labour market will begin to manifest in stronger wages growth.
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