Each state was vulnerable before Delta. In NSW,the male workforce was still 20,000 jobs short in June 2021 compared with February 2020,the month before the first national lockdown. In Victoria,the female workforce still had 10,000 jobs to make up from the state’s two lockdowns.
The Delta lockdowns claimed a further 70,000 male jobs in NSW,and twice as many female jobs between July and October. In Victoria,almost 70,000 men and 60,000 women were laid off. The upshot was that both states suffered hard landings.
The early 1990s recession remains by far the worst of the postwar crises – 4.2 per cent of all jobs disappeared over the course of the retrenchment cycle. Of those,84.6 per cent belonged to men,predominantly in manufacturing,construction,agriculture and mining.
The early 1980s recession,which brought down Malcolm Fraser’s government,saw 3.6 per cent of the workforce laid off,while the mid-1970s recession which terminated Gough Whitlam’s government was less brutal with only 1.4 per cent of jobs lost.
Loading
The NSW deficit of 175,000 jobs or 4.2 per cent of the state’s workforce exactly matches the national toll of the early 1990s recession. Victoria’s deficit of 115,000 jobs (3.3 per cent) is just under the figure for the early 1980s recession. The national scorecard for the COVID recession is closer to the Whitlam recession,with the number of people employed 1.2 per cent lower in October 2021 than it was in February 2020. In raw numbers,that is a gap of 160,000 jobs,of which 67.3 per cent had belonged to women,reflecting lockdown’s hit on hospitality,the arts and education – all majority-female sectors.
But that national figure is meaningless because Delta split Australia into two economies – the locked-down south-east and the all-but COVID-free states of Queensland,Western Australia,South Australia and Tasmania. Queensland and Western Australia in particular have been booming. Between them,they added a combined 120,000 jobs through the pandemic.
The challenges this poses for the recovery would test even the most competent governments in our history. NSW and Victoria,and in particular Sydney and Melbourne,will warp what happens next as they will draw jobs back from the states to their north and west. The speed and the shape of the south-east recovery,and any setbacks the COVID-free states suffer once the virus gets into their communities,will inevitably collide with the budget and electoral cycles.
A cautious government would be mindful of the imbalances,and wary of the risk of a dash for growth that could seed another outbreak. A desperate one would throw money at NSW and Victoria in the hope that voters forget the trauma of 2021.
The most politically difficult part of the recovery equation is immigration. Sydney and Melbourne need large numbers to restart their economies,while the frontier states of Queensland and Western Australia would be happier if both domestic and international borders remained closed until the pandemic ends.
Loading
This double-dip recession,centred in our two largest cities,ends a long run of over-achievement for the Australian economy. Remember that we entered the pandemic with a record of 28 years without the interruption of a deep recession. And we were one of the first countries to recover our initial losses from last year’s lockdowns. We can’t say that now because the federal government was too slow to secure vaccines;the NSW government was too slow to lock down in June;the Victoria government was too slow to appreciate that it had already exhausted its people before its final lockdown.
The undoubted star of the rich world for the time being is South Korea,which has both a lower death rate than Australia’s and an economy that has grown by 1.7 per cent despite the shock of the pandemic. That may change;indeed,the No. 1 lesson of the pandemic is that no country is safe from setback. The Omicron variant could easily reset the global ladder.
The danger for Australia is that we may have further to fall,and that our people,already divided by the experience of COVID,may become even grumpier in 2022.