Economist warns delayed reboot would be too costly as unemployment hits 7.1pc

Australia’s unemployment rate rose again in May with another 227,700 people losing their jobs.

This is less than half the 600,000 people who lost work in April. But the spike was enough to tip unemployment above 7 per cent.

Underutilisation and underemployment are also high too. Underutilisation is now at 20.2 per cent and underemployment is 13.1 per cent, although the latter slightly decreased this month.

All in all, the Australian Bureau of Statistics (ABS) estimated 2.3 million working people were affected by a job loss or worked fewer hours than usual in April and May.

Prime Minister Scott Morrison noted these figures were just before states began easing restrictions and were unsurprising given the circumstances.

But he said the current crisis was still among the most difficult economic times Australia had ever faced.

“We must get Australians back into work. We must maintain our focus on them. All 838,000 of them, but we know there will be more in the months ahead,” he said.

“These are our dark times, but I can see that ray of light, and I’m sure Australians can see that too, but we have to keep moving towards it and work harder each and every day.

“We will not rest. We are working with some of the biggest economic challenges this country has ever faced and our government is working day and night to get the balance right, to get the right supports in place.”

Focus clearly on rebooting

With Australia having seen fewer cases than other countries around the world, lawmakers are firmly focusing on re-opening.

The Morrison government and its state counterparts have committed hundreds of billions of dollars of stimulus since the pandemic began. CommSec puts the total stimulus at nearly $295bn.

While there is still some community transmission in some states, CommSec Chief Economist Craig James thinks the government is now better prepared than it was in March to deal with a spike in cases and is keen to ease the pain on business.

“The process is not without risks,” he said.

“But the price of delaying the reboot too long is getting higher – especially for regions dependent on interstate and international tourism.

“Governments now have the processes and infrastructure in place to deal with any lift in the number of virus cases.”

James also warned a sharp re-acceleration of cases could prompt a backtrack of the easing of restrictions.

He suggested businesses should receive information on what constitutes a new acceleration phase for cases so they can stay on top of a potential second wave.