Double-digit unemployment for the next few years and a plunge in Gross State Product and slow recovery are the headline findings of a new Flinders University analysis of the impact of the COVID-19 pandemic on South Australia.
It suggests economic stimulus will be required beyond the expected six months of the JobSeeker and JobKeeper support to assist workers, families, businesses and organisations to endure the extended effects of the tough measures that have been necessary to curb the virus’ spread.
The Director of Flinders University’s Australian Industrial Transformation Institute Professor John Spoehr says it’s a recession and the outlook is grim, urging the state and federal governments to consider all options.
‘There’s no way of sugar-coating it – the measures we have had to take to tackle the coronavirus crisis are having a profound impact on our state’s economy and employment and will continue to do so until at least 2024.
‘Some 61,000 people will lose their jobs, notwithstanding the JobKeeper initiative. If they’re factored in the total number of impacted jobs may be as high as 110,000. Unemployment will more than double from 52,000 to 117,000 in the current quarter and remain relatively high for the medium term; peak unemployment is expected to reach 13.3% and remain above 10% at the end of 2023.
‘Gross State Product will be 14.8% lower this quarter than it would have been without the COVID-19 restrictions, and recovery will be slow, with GSP remaining 6.4% lower than would otherwise have been the case at this time next year.
‘Our earnings from interstate exports will fall 18% and our overseas export earnings will plunge 23.5%
‘The direct shock to the state economy totals almost $5.1 billion. Importantly, some sectors will be more affected than others. Amongst the biggest employment sectors in this state are the ones most affected – retail, education and training, and accommodation and food services – with their losses far outweighing the growth experienced in other sectors such as hospitals, health care and telecommunications.
‘South Australia isn’t alone in this challenge – indeed, the actions necessary to contain the novel coronavirus have had profound impacts nationally and globally, with sharp declines in economic activity and escalating unemployment. However, our state is facing this crisis from a base of underperformance relative to other states, with lower GSP and lower employment growth than the nation as a whole.
‘Although the outlook is grim, our earlier emergence from the health crisis and bold action so far is a great advantage. The Australian government is undoubtedly considering a range of options; substantial public investment in a national industry modernisation program with a focus on infrastructures such as hospitals, education and digital infrastructure would help breathe life back into the economy.
‘The State government has the opportunity to leverage this with economic recovery and jobs plan underpinned by further investment in social and physical infrastructure, including industry catapults to accelerate the uptake of advanced technologies and skills.
Professor Spoehr says courage was needed to halt the coronavirus in its tracks, and similar courage is central to overcoming the ensuing calamity.
“Considerable investment and stimulus will be fundamental to durable recovery. There are fates worse than debt at times of great economic hardship, particularly when interest rates for the government are at historic lows’ Professor Spoehr says.