Thousands of Australian businesses are at risk of bankruptcy now that JobKeeper is over, economists have warned.
Up to 5,000 businesses are expected to collapse under administration over the next few months, as the end of the wage subsidy also coincides with the lifting of the temporary moratorium on trade in insolvencies.
Accommodation, food and beverage companies are most at risk of going bankrupt after being hit hard by Covid restrictions, with trade credit agency CreditorWatch putting the industry’s probability of default at 5.82%.
The transport, post and warehousing sector is the second sector most likely to be seriously affected, with an estimated probability of default of 5.17%, followed by public administration and security (4 , 88%).
The end of the federal government’s JobKeeper wage subsidy program and the lifting of a temporary business moratorium on insolvency are expected to see 3,000 businesses collapse under administration (stock image)
Accommodation, food and beverage companies most at risk of bankruptcy after being hit hard by Covid restrictions (image of Australian cafe)
Every year, across Australia, 8,000 businesses turn to directors, but government support measures during the Covid pandemic have brought that number down to just 5,000 businesses.
“From a basic arithmetic point of view, we have about 3,000 businesses that have not gone into administration that would normally have taken place in a regular business year, and on top of that we have businesses that have been affected by Covid who simply will not survive because of the conditions in which they fought, ”said Patrick Coghlan, CEO of CreditorWatch. news.com.au.
“And the current Brisbane lockdown will only put more pressure on those already affected, so there will be 3,000 to 5,000 minimum.”
Mr Coghlan said that while up to 5,000 companies entering administration may seem like a large number, there were serious warnings: “200,000 companies could potentially go bankrupt and we now find ourselves in the best of circumstances.” .
He said the end of JobKeeper was necessary for Australia to move on to its next stage of economic recovery, adding that consumer and business confidence is on the rise.
“We’re in a fantastic position, and these closures just need to happen,” he said.
An estimated 150,000 people are expected to lose their jobs now that JobKeeper is over (stock image)
– Accommodation, food and beverage services (5.82% probability of default)
– Transportation, postage and warehousing (5.17 percent)
– Public administration and security (4.88%)
– Administrative and support services (4.77%)
– Information media and telecommunications (4.64%)
– Professional, scientific and technical services (4.62%)
– Retail trade (4.51%)
JobKeeper was hired to help struggling workers and businesses during the brunt of the Covid crisis and has become a saving grace for more than a million Australians.
The government extended the program twice before finally deciding it would end on March 28.
Data from the Australian Taxation Office shows 980,000 workers still depend on the program, with NSW and Victoria being the most dependent states.
Treasury officials also added that 150,000 workers would most likely lose their jobs and be forced into unemployment.
Despite this, Treasurer Josh Frydenberg said the economic recovery in Australia has been stronger than almost anywhere else in the world.
“JobKeeper was an economic lifeline that has helped keep around one million businesses and 3.8 million Australians in jobs during the height of the pandemic,” he said.
“It has achieved its goals of supporting businesses and saving jobs, preserving employment relationships and providing much needed income support across the country.”
Over 2.8 million workers and 680,000 companies left JobKeeper during the duration of the program.
Victoria still has 369,000 people dependent on the program, while New South Wales had 327,000 last month.
“Just because JobKeeper ended doesn’t mean government support ended,” Frydenberg said.
“Our economic stimulus plan will continue to support the economy through targeted support measures as well as tax cuts, business incentives and record investment in skills, training and infrastructure. “
With the end of the recession, the number of unemployed people fell from 1,319,268 at the start of 2021 to 1,166,611 a week ago.
The unemployment rate stands at 5.8 percent.
He is expected to increase once JobKeeper ends, but it is unclear how many people will go from him to unemployment, now known as JobSeeker, who is also expected to be less generous later in the week when the coronavirus supplement ends.
Official estimates put job losses at between 100,000 and 150,000.