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Lockdowns in Victoria, NSW expected to drive unemployment and stall economic recovery

Australia’s employment rate and economic recovery will be dealt a significant blow by lockdowns in Sydney and Melbourne. The unemployment rate has fallen to 4.9 percent, but the latest lockdowns in NSW and Victoria are expected to stall the recovery in the labor market.

The latest job figures include a previous two-week lockdown in Victoria, which drove an increase in underemployment. Business owners hit by restrictions in the country’s two biggest cities have warned they have no choice but to lay off staff. Employment Minister Stuart Robert conceded the lockdowns would have an impact but insisted it would be short-lived. Because structurally the economy is sound, as soon as lockdowns finish, the economy bounces back,” Mr. Robert said on Friday.

Yes to an impact, no to it being long term.

Treasurer Josh Frydenberg said the NSW lockdown cost $100 million a day, and the impact in Victoria was about the same. Mr. Frydenberg said the coronavirus restrictions would definitely set the economy back. He is buoyed by the latest jobs figures, saying: “It does show the remarkable resilience of our economy, not to mention our job market.” But the treasurer has conceded they are unlikely to be the last lockdowns this year.

GDP growth forecasts cut

Economists are already cutting their growth forecasts for this year and the next, expecting the economy to stall through to Christmas and only pick up as more people get the jab. The unemployment rate is at a 10-year low of 4.9 percent, but the numbers are masking underemployment. Some 33 million fewer hours were worked across the economy last month, including Victoria’s last snap lockdown.

People can’t get enough hours, people are in insecure work,” Labor leader Anthony Albanese told AAP on Friday. Prime Minister Scott Morrison has said many Australians have been “building up their balance sheets” over the past year, providing “a bit of a buffer” to get through lockdowns. The truth is that while some people are doing OK, an enormous section of the Australian population is falling behind, and that’s the genuine concern,” Mr. Albanese said.

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