Employment in a Covid economy

The impact of Covid-19 shutdowns on much of the Australian economy was variously predicted to be anywhere from apocalyptic to benign, depending on which industry you most followed, which commentators you believed and what news networks you watched.

It is now more than 18 months since Covid escaped the City of Wuhan in China, with just under 200 million reported cases worldwide and 4.23 million deaths with Covid since. And counting. At the time of writing, much of Australia’s population is in lockdown or under severe restrictions on economic activity. Having so far survived the economic impacts of Covid-19 relatively unscathed (provided you are not in hospitality or tourism or a number of equally impacted industries), it could be timely to look at how employment numbers have fared.

In this analysis, I only refer to full time jobs. Impacts on part time jobs in industries like tourism and hospitality will have been more profound because these industries typically employ many more part time or casual workers. But it takes a full-time wage to justify a mortgage and I prefer this measure to total employment for that reason.

First, the five- and ten-year change in employment by region – kindly broken up for us by the Australian Bureau of Statistics into greater metro region, and ‘rest of state.’ (click on the graphs to enlarge).

The power houses in the last decade have clearly been the greater Melbourne and greater Sydney economies. For perspective, those two economies in the last decade added 694,200 jobs to Australia’s market – easily exceeding the 417,400 new jobs created across everywhere else in the country. This could be a good thing if you lived in either, or a bad thing if you didn’t. It does suggest we were developing an “all the eggs in one basket” dependency on metro Sydney and metro Melbourne. With such a dependency comes a lack of resilience of course. If those two economies sneeze (very sorry for the pun in a story about Covid and the economy), we all get very sick.

The five-year numbers show however that that differential gap was narrowing. In the most recent five years, metro Sydney and Melbourne added a combined 384,300 additional full-time jobs, which was broadly the same as the 404,200 jobs created elsewhere. So they went from contributing 63% (roughly two thirds) of total new national full time jobs in the last decade to 49% (let’s call it half) in the most recent five years. Still with a lot of eggs in those two baskets, but not quite as many as before.

Now let’s look at the change in full time jobs since Covid escaped Wuhan.

The impacts weren’t really felt in Australia until February – March 2020 when the first outbreaks (and lockdowns) began to appear in Australia. The greater Sydney story since then – roughly an 18 month period – has fared the worst, shedding 20,000 full time jobs. The higher they climb the faster they fall maybe? Also suffering a reduction in full time jobs were greater Melbourne, along with the balance of NSW, the balance of Victoria, greater Adelaide and the NT. (That impact in the NT, given its smaller overall size, would be more sorely felt, so keep that in mind for our NT cousins).

The star performer since Covid has been greater Brisbane, which added 25,000 full time jobs, followed by the rest of Queensland. That’s very interesting (and encouraging for us Brisbanites) and could explain the reported bump in interest from interstate migrants. Brisbane was coming off a smaller base (see the first graph) and is yet to emerge from Covid unscathed, so it may be too early to read too much into this encouraging news.

Looking more closely now at how the major metro economies performed in this period (and apologies to SA, the NT, Tassie and the ACT but you don’t fit on the graph and doing so renders the scale meaningless). All major metro economies came out of December 2019 with a dip, with Sydney and Melbourne picking up by February 2020 but then taking their long term declines into the year and beyond. Sydney hit its low spot in May 2020 and began to claw back from then. Melbourne hit its low spot in September 2020 and has staged a solid turnaround since then. Brisbane’s low spot was in May 2020 and it now has more full time jobs since Covid began. Perth was not as badly affected during Covid and also now has more full time jobs than since the pandemic began.

The big question is what happens next? Some believe Brisbane is entering a ‘golden decade’ of growth, spurred on to an Olympics 2032 target. The declining interest in overpriced metros like Sydney and Melbourne could drive more people and jobs across the border into Queensland, or into more regional centres of those states. Certainly, this is happening in centres like San Francisco, New York or Los Angeles. Why pay exorbitant prices for housing and still have to commute long hours to a job you can do equally well in a better and more affordable home in a better suburb, seems to be the rationale.

Then again, the same forces that drove Sydney and Melbourne to account for half the jobs growth across the country for a decade, could return. If they do, I suspect it will take time.

The reality is that this has further to go. Australia’s initial resilience in terms of full-time jobs owes much to the Federal Government’s Jobkeeper and related support packages. They have now run their course (adding eye watering sums to our debt in the process). What happens next will very much depend on the extent to which we overcome irrational vaccination fears and allow our economy to open up more fully without intermittent, unpredictable and highly damaging lockdowns. Here’s hoping we don’t have long to wait.