Dr Brendan Rynne, KPMG Chief Economist, comments on ending of the JobKeeper program
KPMG anticipates the ending of the JobKeeper program will add to the pressure of those marginal workers and businesses that are still struggling in this coronavirus-impacted economy.
We understand from recent comments by the Treasury Secretary that there are still more than 1 million JobKeeper recipients as of today – however, we also appreciate the strength of the economy and individual businesses is quite different now, compared to when those businesses may have applied to have the wages of their workforce subsidised by the scheme.
We assess the risk of job losses associated with the cessation of JobKeeper is closer to 100,000, which, while still significant, is much more manageable in a strengthening economy from a macro labour market perspective.
We don’t see a cliff as JobKeeper runs off but expect that as the stimulus in the economy slows insolvencies will naturally cycle back to pre-COVID levels.
Ultimately the decision to stop JobKeeper now looks to be the right one. Good businesses will survive and businesses operating at the margin today have the benefit of an improving economy and support through other channels, like a lower cost of debt and a range of state and federal government grants.
While that it is the case, KPMG also appreciates that not every business and not every job in place today will necessarily be in place tomorrow or in a month’s time. But this is also normal. The government has supported the population and the economy very well during this global pandemic, and we remain optimistic that while JobKeeper finishes shortly, better times are ahead of us.