The Reserve Bank of Australia (RBA) has released a report into the JobKeeper legislation, revealing it could have saved 700,000 jobs, albeit with the potential bias of sampling based on casual employees.
In its first six months, the RBA also said JobKeeper supported around 3.5 million workers in more than 900,000 businesses, and undoubtedly played a crucial role in cushioning the decline in employment and incomes over the first half of 2020.
The central bank’s report found that one in five workers would have lost their jobs if they were not supported by the $1,500 a fortnight subsidy in the first four months of the pandemic.
Treasurer Josh Frydenberg first introduced JobKeeper in April, and it was available to businesses impacted by virus lockdown measures.
The policy allowed businesses to retain staff and subsidise wages for part-time and full-time employees.
The study estimated that without JobKeeper, employment would have fallen by twice as much as it did.
However, the RBA made it clear that the study looked into how JobKeeper supported employment in the first few months of the program and doesn’t consider the effects from August 2020 onwards.
The authors of the RBA study, James Bishop and Iris Day, said policymakers should not assume that the short-term effects of the scheme will necessarily persist.
“The international evidence suggests that wage subsidies, if kept in place for too long, can have adverse effects on incentives and get in the way of necessary labour force reallocation,” they said.
“In addition to keeping existing employment relationships intact, another key objective of JobKeeper was to provide income support to business owners and their workers. We do not look at this important aspect.”
Mr Bishop and Ms Day also noted several assumptions in the study, some of which are potentially important and should be kept in mind when interpreting their findings.
For example, they point that the study’s conclusions are based on the experiences of a group of casual employees with fairly short job tenures, who may have responded differently to JobKeeper than other groups of workers.
They also noted that the study assumed that JobKeeper did not have a material effect on those people who did not receive the payment.
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