Grim prediction for Australia’s future
Australia's COVID-19 recession could last for years with economists predicting the jobs market may not return to normal until 2023.
The grim findings underline the long term impact of today's jobs figures which are expected to deliver the worst result in 22 years.
Overnight, the OECD released new economic forecasts predicting the Australian economy will not get back to its pre-coronavirus level until 2022 with the Victorian coronavirus lockdown extending the recession.
But here in Australia, ANZ economists have predicted it could take even longer to return to normal.
"We have downgraded our labour market forecasts, and now don't expect employment to recover to pre-pandemic levels until 2023,'' ANZ senior economist Catherine Birch said.
"The labour market outlook is very worrying. Without more fiscal stimulus, unemployment would rise to - and possibly remain at - an unacceptably high level, with damaging long-term consequences."
The OECD warned that "localised lockdowns, border closures and new restrictions being imposed in some countries to tackle renewed virus outbreaks are likely to have contributed to the recent moderation of the recovery in some countries, such as Australia."
"Put simply closed borders cost jobs and put the economy in a weaker position to recover,'' Treasurer Josh Frydenberg said.
"The Morrison Government will continue to do what is necessary to cushion the blow and help all Australians get to the other side of the crisis."
Labor's treasury spokesman Jim Chalmers said the grim outlook underlined the risk of slashing payments for the unemployed and the wage subsidy JobKeeper.
"During the deepest recession in almost a century and an escalating jobs crisis, it makes no sense for the Morrison Government to be withdrawing support without a comprehensive jobs plan to replace it,'' he said.
"The OECD joins the RBA and prominent economists' calls for more support, not less. Instead of a jobs plan, Scott Morrison and Josh Frydenberg want to wind back JobKeeper, cut super, cut wages, freeze the pension, point the finger and shift the blame.
"This recession will be deeper and unemployment queues will be longer because the Morrison Government is leaving too many people behind in this first recession in three decades."
A new analysis released today by the McKell Institute underlines the concerns.
It warns that the Morrison Government will rip $1.52 billion out of the economy every fortnight as a result of the reduced JobKeeper per fortnight payments.
By Christmas, this represents a $9.9 billion reduction in fiscal support than would have occurred if the Commonwealth maintained JobKeeper at its original rate.
An estimated one million part time workers will have their JobKeeper pay reduced from $1500 per fortnight to $750 per fortnight, while approximately 2,430,000 full-time workers will see their JobKeeper pay reduced to $1200.
Originally published as Grim prediction for Australia's future