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Casuals, youth and women to be hardest hit by ‘virus recession’


Economist criticises government stimulus package and says businesses will be forced to reduce their staff

Australia is likely to face an economic recession that will largely affect casual workers, women and younger people looking for work, a leading Sydney business academic has said.

Raja Junankar, an economics professor at the University of New South Wales, has warned that the Covid-19 virus is “accelerating its impact on economies globally” and that Australia needs to prepare for a recession.

He said many businesses would reduce their casual and part-time staff as part of their response to financial pressures caused by the global pandemic.

Junankar also questioned whether the Morrison government’s $17.6-billion economic stimulus package, announced on 12 March, would help steady the economy.

“Firms are not likely to increase their investment in capital goods as there is a lot of uncertainty due to the spread of Covid-19. It is therefore unlikely that the support to businesses in the coalition stimulus package will bring the economy back to avoid a recession,” he said in a university statement.

“The package is also not well targeted. Rather than targeting workers, it has been designed to help employers. There are elements of tax relief for small businesses and $1.3bn to support payments to apprentices—however, such policies are not directly assisting workers and are based on the assumption that all employers are good and fair.”

He also compared the Morrison government’s stimulus package with the measures introduced by former prime minister Kevin Rudd in 2008 to mitigate the effects of the global financial crisis.

“Morrison’s stimulus package is smaller in comparison. The cash payment to pensioners and Newstart recipients [seeking jobs] is only $750—which is much less compared to Rudd’s stimulus package that offered $900 back in 2008.”

Junankar said that unemployment and underuse of workers would increase over the next six months due to the impacts of the coronavirus.

“Workers in part-time and casual positions—especially those whose income is heavily dependent on the gig economy—run a higher risk of losing their jobs. Casual workers will also have to carry the financial burden of going without pay for two weeks if they need to go in self-isolation,” he said.

“Whilst it is a choice for many women to take up part-time work to spend more time with family, we note that the underutilisation rate in Australia has gone up by 14 per cent even if unemployment has been hovering around 5 per cent.”