Which Industries Need More Support
Updated: Jul 16, 2020
As Australia's COVID-19 recovery hits full steam, not all industries will respond at the same rate. While the property market has been impacted less than expected - read last months article House Prices Remain Resilient, and some industries are thriving in the new environment - read last months article on Which Industries Are Winning During Covid, others are likely to remain at standstill or worse for months to come. Hospitality is just starting to wake up, arts and event management will be down for a while, and international tourism remains nothing but a distant possibility. In this new post-COVID world, some industries are going to need much more support than others.
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The economic response packages released by the Australian Government have been fairly well received, despite massive inconsistencies between income grades and a massive budget error. With the JobKeeper payment and JobSeeker supplement both set to expire at the end of September, however, entire industries are going to be crying out for extra support. Certain segments of the economy have already been singled out, with the childcare industry given early support and the construction sector boosted through the new HomeBuilder program.
Certain industries are going to be in pain for a long time to come, however, with increasing pressure put on the government to produce tailored relief packages. According to Deloitte Access Economics, the arts and hospitality industries have been hit hardest by the coronavirus, with these two integrated sectors likely to take more than five years to recover. Between 50% and 60% of jobs have been lost in the accommodation, food, arts, and recreation industries, with some of these jobs not expected to return before the end of 2025. As you can see, these dates do not align with current support packages.
The tourism industry has been reduced to a shadow of its former self, with businesses reliant on international tourism the hardest hit. While Australian states are starting to open up and more flights are becoming available all the time, it will be a long time before international visitors come to our sunny shores. Even when international borders reopen, the number of people flying across the world for a holiday is likely to remain low due to increased anxiety and reduced disposable income.
Other sectors are also likely to experience a protracted recovery period, including retail, finance, and pretty much anything that involves discretionary spending. According to Deloitte, retail spending dropped by a record 18% in April, with an estimated 10% of jobs in the sector already gone and a full recovery unlikely until August 2025. Even the finance sector, which has been heavily supported by the Reserve Bank, faces a delayed wave of job losses as the effects of the pandemic sweep through the entire Australian economy.
According to preliminary retail sales figures released by the Australian Bureau of Statistics (ABS), discretionary spending has already fallen to half its normal levels for this time of year, including things like clothing, footwear, accessories, eating out, and takeaway food. As some industries wake up again in the lead up to October and the planned end of many government support packages, other sectors of the economy are likely to need renewed assistance and custom support for months to come.