Changes to JobKeeper could have dire consequences for hospitality workers

In late May, Reserve Bank of Australia governor Philip Lowe said that keeping workers employed was crucial to the country’s economic recovery. 

Integral to this mandate was extending JobKeeper payments beyond the government’s September deadline.

Currently, the federal government's $1,500 a fortnight JobKeeper scheme supports 3.3 million workers and economists fear up to a third of workers on the $70billion JobKeeper program would struggle to stay employed without taxpayer help. Westpac chief economist Bill Evans believes 500,000 people will need it until June 2021.  

Many of these will be in vulnerable industries such as hospitality.

According to Westpac, almost half, or 313,582 of the 500,000, are in hospitality with the rest in arts and recreation (129,104), education and training (124,034) and transport, postal and warehousing (157,698).

Westpac has calculated the government would need to spend $24 billion extending the existing $70 billion program.

“Those industries that are going to be affected by the extension of social distancing, by the extension of foreign travel restrictions will get an extension in JobKeeper,” Evans said. 

“We think there will be about a million jobs will retain the JobKeeper benefit for the three months after September.” 

Overall, more than one million people will need further support.

“It's clearly going to be a critical point when that scheme comes to an end,” Lowe said.

“It will be important to review the parameters of that scheme. It may be in six months’ time we bounce back well and the economy is doing reasonably well and the schemes which were temporary in nature can be reformed without a problem. But if the economy has not recovered reasonably well by then, as part of that review we should be looking at perhaps the extension of that scheme,” he said.

“Right through to next year the economy is going to need support, from both monetary and fiscal policy… my main concern is that we don't withdraw fiscal support too early.”

With Victoria now back in lockdown and NSW rethinking its COVID-19 policies as its starts to suffer further outbreaks, a September revival looks grim and it is unlikely that the economy will have recovered sufficiently to assist employees who are currently receiving JobKeeper.

If this is the case millions of employees will be at risk of retrenchment, many in hospitality in Victoria and NSW, with the worst hit potentially being café and restaurant workers. 

Prime Minister Scott Morrison has previously said he would not be continuing JobKeeper in its current form, although that is not a set in stone policy, with Treasurer Josh Frydenberg due to deliver an economic statement on 23 July outlining the future of JobKeeper. 

What is likely is some employees will transition from JobKeeper to unemployment benefits: unemployment is currently sitting at 7.1 per cent and could be as high as 11 to 13 per cent.

The expectation is a revamped JobKeeper will be unveiled with new assessment criteria; instead of a flat $1500-fortnightly payment for six months, there will be different rates of pay and a rolling assessment process to ensure ongoing eligibility. 

Businesses will also be hit

If businesses have to let staff go because they can’t bounce back, they will have to pay out entitlement from cash reserves, some of which are extremely low or non-existent.

"It's been a good scheme because it's meant keeping more people on,'' he said. "But many are accruing a debt that they can't pay because they haven't got the income coming in,” said Council of Small Business Organisations Australia chief executive Peter Strong. 

Strong urges businesses not to keep zombie workers on the payroll due to JobKeeper as this will ultimately hurt the business and the remaining employees. 

Effectively, new eligibility criteria for the revamped JobKeeper will be assessed by the Australian Taxation Office. It will be up to each small business owner to decide the viability of their business and whether they should scale back, close or persist with JobKeeper in the belief they will recover.

Whatever the outcome, businesses will be hit hard and employees will face a JobSeeker subsidy that is expected to be less than what was first rolled out when COVID-19 stimulus packages were first introduced.