Prime Minister Scott Morrison says double-digit unemployment forecasts are a tragic situation amid calls to lock in enhanced welfare support for those affected.
Prime Minister Scott Morrison has described as “heartbreaking” forecasts some 700,000 Australians will be forced out of work because of the coronavirus pandemic.
Unemployment is forecast to reach 10 per cent in the June quarter, from 5.1 per cent, taking the rate to its highest point in a quarter of a century.
The jobless rate is expected to surge to some 1.4 million people amid coronavirus restrictions, which have forced businesses to shut their doors.
Economist Stephen Koukoulas told SBS News the unemployment toll of the pandemic will have a lasting impact requiring a long-term response.
“It would be unrealistic to expect that we are going to get back to five per cent unemployment any time soon,” he said.
“We just need to be aware that this economic situation for so many people is severe hardship.”
Treasury predicts the unemployment rate would have reached as high as 15 per cent without the federal government’s $130 billion wage subsidy program.
Prime Minister Scott Morrison described the mass unemployment as a tragic situation.
“It’s a heartbreaking number,” he told Channel 9.
“Unemployment at that rate, hundreds of thousands of people losing their job. It is just absolutely heartbreaking.”
But the prime minister said the government's coronavirus response measures had helped limit some of that “devastation”.
JobSeeker payments for the unemployed have been bolstered through a $550 supplement, which means those on the benefit can access $1,100 a fortnight.
The JobKeeper scheme passing on a $1,500 fortnightly payment is estimated to cover some six million workers impacted by the coronavirus.
Both measures have been implemented for the next six months.
Mr Koukoulas predicts unemployment could still sit at some 7 per cent at the year's end.
He also pointed out Treasury estimates did not release figures on those now underemployed.
“Remember that each 1 per cent on unemployment is about 120,000 people - so you are talking a huge number of people,” he said.
Calls to lock in JobSeeker increase beyond pandemic
The Australian Council of Social Services has long argued for a $95 increase to unemployment benefits.
But the Federal Government had resisted these calls before the coronavirus outbreak, saying its focus was on getting people into jobs.
ACOSS principal adviser Peter Davidson told SBS News a permanent increase to income support payments was needed more than ever to ensure people aren’t left behind beyond the pandemic.
“If we get through the coronavirus emergency … we are going to face another crisis, which is the unemployment emergency,” he said.
Mr Davidson said once unemployment reaches the 10 per cent figure there was concern it would become stuck at elevated levels.
He questioned how previous welfare support measures could suddenly became acceptable with this in mind.
“Why would it be enough for people to live on when we have double-digit unemployment?” he said.
"Why is it enough for anybody to live on?"
The double-digit unemployment rate would be the highest since April 1994.
The peak unemployment figure Australia has experienced was 11.2 per cent in 1992.
Labor Leader Anthony Albanese also warned a sudden return to the $40-a-day welfare support could lead to a "massive shock to the economy".
"What is extraordinary about the politics of this time is how many arguments the government was completely against - they're now in favour of," he said.
He said Labor has for some time supported increasing the rate of unemployment benefits.
Labor calls for expanding of wage subsidies
The JobKeeper wage subsidy paid to employees through employers hit by coronavirus restrictions allows these workers to access $1,500 per fortnight.
But casuals who have been with their employer for less than 12 months, including many within the arts and entertainment industry, are exempt.
Temporary visa holders are also not covered under the plan.
Labor’s treasury spokesperson Jim Chalmers said the unemployment forecast could be reduced by further expanding the government’s wage subsidy plan.
“When unemployment spikes in the next few months, remember hundreds of thousands of job losses could have been prevented if the Treasurer picked up his pen and included more workers currently left out and left behind,” he said.
But the Federal Government has resisted these calls, maintaining it has no intention on changing its approach.
"As for the speed in which people get back into the workforce, who have tragically lost their jobs, that will depend to some extent on the health restrictions in place."
The treasurer said decisions about the end date of response payments would come closer to the time.
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