CANBERRA, AAP – The end of the JobKeeper wage subsidy is looking less dangerous than previously thought because the economy is in recovery and the jobs market is doing so well, a leading economist believes.
But federal Labor argues there will be no decent economic recovery unless there is also an improvement in wages growth.
Monthly labour force figures for December later this week could see a decline in the jobless rate to 6.7 per cent from 6.8 per cent, a further pullback from the 7.5 per cent seen last July during the depths of recession.
“The jobs market has been very good,” Deloitte Access Economics partner and economist Chris Richardson told AAP.
“We already have six out of every seven of the initial job losses back.”
There are concerns about what impact the planned withdrawal of JobKeeper in March will have on employment and the economy more broadly.
“It’s always going to be a dangerous phase when JobKeeper comes off,” Mr Richardson said.
“It is genuinely looking less dangerous because we have done so well on jobs.”
However releasing the Deloitte Access Economics quarterly business outlook on Monday, Mr Richardson expects wage and price pressures to keep “bumping along the bottom” for sometime.
He does not expect annual inflation to climb much until unemployment drops well under six per cent, which he says won’t happen until 2023.
Even then, annual wage growth is not expected to climb back above two per cent until 2024.
“We welcome any encouraging signs in the economy. But for it to be a good recovery, the right kind of recovery, we need to make sure that there’s job security and wages growth for ordinary working families,” shadow treasurer Jim Chalmers told reporters in Brisbane.
“There’s no decent recovery without a recovery in wages. It’s as simple as that.”
Still, Mr Richardson says Australia is one of just five nations who entered 2021 in relatively good shape – Taiwan, China, Vietnam and New Zealand being the others.
“COVID numbers are very low, the vaccine news is excellent, confidence is rebounding, Victoria is catching up to the recovery already under way elsewhere,” Mr Richardson said.
“Australia has made many mistakes in juggling COVID but so far we’ve made fewer mistakes than most of the globe. You’d rather be here than almost anywhere else.”
Victorian Premier Daniel Andrews jumped on the report, which predicted his state leading the way in economic growth in 2021 with a rate of 5.4 per cent.
“That should be something that sees Victorians confident … that 2021 is going to be a very different year than 2020,” he told reporters in Melbourne.