Struggling businesses are set to miss out on JobKeeper from next week – causing two million workers to lose their wage subsidies and potentially their jobs.

Australia’s economy is already in recession for the first in 29 years, after coronavirus shutdowns caused a record plunge in economic activity.

Since the pandemic began in March, the number of jobs across Australia has plunged by a national average pace of 4.5 per cent, official payroll data released on Tuesday revealed.

In Victoria, the tally of jobs have plummeted by an even more dramatic 8.3 per cent over six months – a level more than double the 3.7 per cent decline in neighbouring New South Wales and the 3.1 per cent drop in Queensland. 

Melbourne, Australia’s second biggest city, has been placed into a strict, Stage Four lockdown since August 2 with an 8pm to 5am curfew.

Struggling businesses are set to miss out on JobKeeper from next week - causing two million workers to lose their wage subsidies and potentially their jobs. From September 28, JobKeeper will cover 1.4million workers instead of 3.5million. Pictured is Melbourne's Chadstone Shopping Centre during the Stage Four lockdown in the Victorian capital

Struggling businesses are set to miss out on JobKeeper from next week – causing two million workers to lose their wage subsidies and potentially their jobs. From September 28, JobKeeper will cover 1.4million workers instead of 3.5million. Pictured is Melbourne’s Chadstone Shopping Centre during the Stage Four lockdown in the Victorian capital

Despite that economic carnage, the number of workers across Australia eligible to receive JobKeeper wage subsidies from their employer will plunge from 3.5million to 1.4million from September 28.

Australia’s COVID-19 jobs carnage by state

VICTORIA: Down 8.3 per cent

NEW SOUTH WALES: Down 3.7 per cent

QUEENSLAND: Down 3.1 per cent

SOUTH AUSTRALIA: Down 2.7 per cent

WESTERN AUSTRALIA: Down 0.9 per cent

TASMANIA: Down 4.3 per cent

NORTHERN TERRITORY: Down 2 per cent

AUSTRALIAN CAPITAL TERRITORY: Down 4.5 per cent

AUSTRALIA AVERAGE: Down 4.5 per cent 

Source: Australian Bureau of Statistics payroll jobs data showing the changes between March 14 and September 5 

That will see more than two million people lose JobKeeper as a flat $1,500 a fortnight payment is replaced with a $1,200 subsidy for those who work 20 hours or more.

Part-time workers putting in fewer hours will be eligible for just $750.

JobKeeper is being phased out completely in March with the October 6 budget reportedly ruling out another extension. 

Making matters worse, businesses receiving JobKeeper 2.0 will be required to demonstrate their Goods and Services Tax turnover had plunged by 30 per cent in the September quarter of 2020 compared with the same three months in 2019.

Tax agent H&R Block’s director of tax communications Mark Chapman said this would see many small businesses miss out, even if they had suffered a sharp revenue fall, putting jobs at risk.

‘That could jeopardise the survival of many businesses because if, for example, they only show a 20 per cent fall, that is significant enough to make many small businesses non-viable, but not significant enough to qualify for JobKeeper,’ he told Daily Mail Australia.

‘At the very least, many affected businesses will let go of staff over the next few weeks as they can no longer afford to keep them on the books.’

Since JobKeeper debuted in April, 928,864 businesses have qualified for a wage subsidy.

Sydney’s city centre, the home of struggling cafes, had 10,948 businesses receive JobKeeper while Melbourne’s central business district had 7,165 firms propped up with a taxpayer subsidy.

While these businesses are set to continue receiving JobKeeper, the likes of suburban shops are likely to miss out by virtue of having revenue falls of less than 30 per cent.

Sydney's city centre, the home of struggling cafes, had 10,948 businesses receive JobKeeper

Sydney’s city centre, the home of struggling cafes, had 10,948 businesses receive JobKeeper

Small business accountant Ben Johnston, a director of Johnston Advisory, said stricter JobKeeper 2.0 rules would be devastating for the economy and would hurt the construction sector which didn't need help in March. Pictured is a Melbourne building site in September

Small business accountant Ben Johnston, a director of Johnston Advisory, said stricter JobKeeper 2.0 rules would be devastating for the economy and would hurt the construction sector which didn’t need help in March. Pictured is a Melbourne building site in September

Small business accountant Ben Johnston, a director of Johnston Advisory, said stricter JobKeeper 2.0 rules would be devastating for the economy – following a record seven per cent plunge in Australia’s gross domestic product during the June quarter.

THE JOBKEEPER RED ZONES BY POSTCODE

SYDNEY (2000): 10,948 businesses

MELBOURNE (3000): 7,165 businesses

LIVERPOOL, SYDNEY’S SOUTH-WEST (2170): 4,293 businesses 

CRANBOURNE, MELBOURNE’S SOUTH-EAST (3977): 3,134 businesses

BAULKHAM HILLS, SYDNEY’S NORTH-WEST (2153): 3,096 businesses 

BANKSTOWN, SYDNEY’S SOUTH-WEST (2200): 2,505 businesses 

ROUSE HILL, SYDNEY’S NORTH-WEST (2155): 2,333 businesses 

CROWS NEST, SYDNEY NORTH SHORE (2065): 2,126 businesses  

CHATSWOOD, SYDNEY NORTH SHORE (2067): 2,090 businesses 

Source: Treasury 

‘It’s going to have an alarming, a huge impact on the economy,’ he told Daily Mail Australia.

‘We’ve got people that are heavily reliant on it for their businesses to support employment which is now going to be taken away from them.’

The tighter rules would be particularly devastating for dine-in restaurants – already battling the effects of social distancing rules – as reduced JobKeeper subsidies diluted the spending power of their customers.

‘A lot of the suburban restaurants, where people are now eating out, what I can’t understate is the economy has been ticking over on artificial money,’ Mr Johnston said.

Adding to those woes, Australia’s 1.45million JobSeeker recipients will have their unemployment benefits, as of September 25, reduced from $1,115.70 a fortnight to $815.70 as the temporary coronavirus supplement is halved from $550 to $250.  

Under the new JobKeeper wage subsidy rules, companies only qualify if they were in financial strife at the start of the pandemic in March. 

Mr Johnston, who has been an accountant for 24 years, said construction firms that didn’t need JobKeeper the first time around were particularly vulnerable now as an economic slowdown belatedly reduced demand for home renovations.

‘Every construction client that I’m talking about is really, really worried about that impact leading into Christmas,’ he said.

‘People are unsure about job retention and people are getting made redundant. 

Adding to those woes, Australia's 1.45million JobSeeker recipients will have their unemployment benefits, as of September 25, reduced from $1,115.70 a fortnight to $815.70 as the temporary coronavirus supplement is halved from $550 to $250. Pictured is a Gold Coast Centrelink queue in March

Adding to those woes, Australia’s 1.45million JobSeeker recipients will have their unemployment benefits, as of September 25, reduced from $1,115.70 a fortnight to $815.70 as the temporary coronavirus supplement is halved from $550 to $250. Pictured is a Gold Coast Centrelink queue in March

‘The construction industry didn’t feel it at the start because home owners had pre-approved construction loans and builders were on site so they kept working away through coronavirus because they had access to money.’

JOBS FALSE DAWN

Unemployment rate fell from a 22-year high of 7.5 per cent in July to 6.8 per cent in August

Participation rate rose from 64.7 per cent to 64.8 per cent 

Number employed rose by 111,000 to 12,583,400

Jobless ranks fell by 86,500 with women making up 55,000 or 64 per cent of those

Source: Australian Bureau of Statistics  

H&R Block said companies that sold their assets to meet cash flow challenges may also have trouble qualifying for JobKeeper 2.0.

‘Businesses need to include sales of capital assets – like plant and machinery, fixtures and fittings – in turnover for the purposes of the 30 per cent test,’ Mr Chapman said.

‘Some businesses have been forced to sell off their assets to survive – they will now be penalised because the proceeds of those sales will be included in their turnover, meaning that they may not qualify for JobKeeper.’

Australia’s unemployment rate fell from a 22-year high of 7.5 per cent in July to 6.8 per cent in August, as 111,000 new jobs were created. 

The good news, however, was more the product of more retrenched people declaring themselves to be self employed. 

Westpac senior economist Justin Smirk said the latest payrolls data, based on tax office figures, showed sectors that had previously weathered the coronavirus shutdowns were now shedding staff. 

‘The downtrend continues in Victoria while the job losses in NSW have broadened out to sectors not affected by the earlier lockdown,’ he said.

How are the support payments changing from September?

JOBKEEPER

* The $1,500 fortnightly wage subsidy will continue until September 27 – covering 3.5million workers

* From the end of September to December 31, JobKeeper will be reduced to $1,200 for full-time workers and $750 for people working 20 hours or less – with 1.4million workers eligible

* From January to March, the full-time rate will be $1,000 and part-time will reduce to $650 – with the scheme covering 1million workers

* Businesses turning over less than $1billion will have to requalify for the program at both stages through showing a 30 per cent drop in revenue.

* Businesses with more than $1billion in turnover have to demonstrate a 50 per cent fall

JOBSEEKER

* The elevated unemployment benefit will remain at $1,100 a fortnight until September 24

* From that date until the end of the year the $550 coronavirus supplement will be cut by $300 to make the overall fortnightly payment $800

* People will be able to earn up to $300 without having their payment reduced

* The mutual obligation rules requiring people to search for four jobs a month will restart on August 4

* Penalties for people refusing a job offer will be reintroduced

* Job search requirements will increase in September when the assets test will also return

* The permanent JobSeeker rate to take effect from January next year will be announced in the October 6 budget.

 



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