The End of JobKeeper
For Australian eligible businesses, the federal wage subsidy introduced during COVID known as JobKeeper ends on 28 March 2021.
Employers will no longer be able to apply for, or expect, wage subsidies from the Government to retain employees.
JobKeeper has, without a doubt, done what its title suggests – kept jobs and kept unemployment lower. We will not go into the negatives about JobKeeper as you can read our other blogs here (Part 1 of 4) on this topic – it was a rushed bandaid at a time when businesses, families and the economy needed something.
The unemployment rate (seasonally adjusted) is currently 6.4% (January 2021). This was expected to blow-out to between 9 – 10% without the JobKeeper mechanism along with other state and federal initiatives. Australia reached a peak of unemployment rate of 7.5% in July 2020 and has been on a steady decline since October 2020.
What does the world look like for businesses post-JobKeeper?
It is fair to say that Australia cannot afford to keep a wage subsidy like JobKeeper going any longer. Instead, better-targeted funding or initiatives for employers is an alternative way forward.
Will unemployment increase?
Yes it will. Whilst employers have been very creative in this brave new world about how to adapt their businesses, without a wage subsidy to keep employees in employment, businesses will now have to make difficult decisions based on new cashflow models, streams of income and profit margins.
Unfortunately, in the first instance, it may well be the younger demographic and part-time employees such as older workers and working mothers who are likely to be the most impacted from these decisions.
JobKeeper stopped businesses from transitioning to these models ahead of 28th March 2021, so we will see many changes happening quickly in this space after this date.
The flow-on impact
Fewer jobs = less money (and disposable income), reduced spending on a raft of things from “essentials” to discretionary spending, meaning less income for businesses in many industries. This is going to mean constantly moving goalposts for employees and employers as they navigate through a business model that is going to keep changing as income streams dry up, other streams open up and people tighten their belts.
Low-interest rates will help but the housing boom also needs to be controlled. There seems to be no consensus on how and when this will be brought under control. The end game may well be a property bust as people lose jobs and the ability to pay mortgages, or service investment properties. On the other hand, very few people foresaw the property price hikes over the last 12 months on the back of COVID, so it’s an uncertain proposition.
What should businesses do?
If you haven’t already, it is crucial for businesses to get an understanding of how their revenues, profits, and cash flow looks post 28th March 2021 – Payroll is only one factor in understanding which way to jump as a business:
What income streams do you consider solid or variable?
What other revenue channels can you pursue to shore up your business?
What resourcing do you need now, in 6 months and in 3 years depending upon realising the proposed income streams?
What flexible employment options can you consider? Your people are still your greatest asset
Have you had any conversations with your people about what impacts there might be?
Tough times still call for sound HR processes
Times may be about to get tougher for some people as businesses streamline, but that doesn’t mean that businesses can avoid a sound HR process – you must consult, you must offer a support person when talking about situations that may have a negative impact on a person’s employment and you should put everything in writing.
Don’t cut corners as it will end up costing you more in time, energy, reputation and possible pay-outs.
This is what HR Unplugged does every day - please reach out to us to see how we can help, in a targeted and practical way – we can help your business get creative on what you might need to do next post-JobKeeper, look at your people resourcing and help you make sound decisions that fall within the expectations of the Fair Work Act.
Call or WhatsApp 0424 995 502 | mel@hrunplugged.com.au