Top Industries That Are Cashing In On JobKeeper
The JobKeeper is a government-sponsored temporary wage subsidy provided to Australian businesses that have been impacted by the coronavirus pandemic.
In a nutshell, it aims to keep the country’s businesses afloat by helping employers retain their staff amid the economic downturn with a $1500 fortnightly payment per employee.
While most Australian businesses are eligible for JobKeeper, reports have shown that many of those who availed the program came from the construction and health industries, suggesting the considerable impact of the pandemic to these two important sectors of the economy.
Data from the Treasury...
reports that JobKeeper has supported around 1.1 million employees in health, construction and professional industries, which make up a third of all businesses receiving the wage subsidy.
Out of the estimated 900,000 businesses and 3.3 million workers nationwide that availed the program, the biggest industries come from:
- Construction: 140,138 entities with 348,077 employees
- Professional, scientific, and technical services: 130,052 entities with 396,424 employees
- Health care and social assistance: 81,082 entities with 385,679 employees
- Accommodation and food services: 58,620 entities with 313,528 employees
- Arts and recreation: 37,640 entities with 129,104 employees
The Construction Industry
Although the construction sector was allowed to operate during the lockdown, the Australian Bureau of Statistics reported that about 80% of its businesses have either claimed or applied for a wage subsidy.
Due to the boom-bust nature of construction work, the building industry is typically one of the first to get hit during an economic downturn. With a drop in the number of clients seeking to build new houses and building, there won’t be enough work for the builders.
Moreover, 98% of the industry is comprised of small businesses, like small-time builders and tradies and others in the building supply chain that have been affected by the massive contraction in demand due to the restrictions on economic activity imposed to save lives.
The Health Sector
It’s a no-brainer that the health industry is the most heavily impacted by the pandemic. While hospital workers face the risk of coronavirus infection, there are also a great number of other healthcare professionals with shaky employment status. These include those who work in general practice clinics, which experience a considerable drop in patient volume as many people put off seeing their GPs because of the risk of COVID-19 infection.
Drs. Maria Boulton and Fiona Raciti, co-owners of Brisbane's Family Doctors Plus, registered their business in the $130 billion JobKeeper subsidy program after a more than 30% drop in revenue and forgoing their own pay for months: "All our extra dollars are going into our practice to keep our staff employed and doors open. But at some point we need to start paying ourselves so we can pay our (own) bills," says Dr. Raciti.
Changes to JobKeeper
The federal government extended the JobKeeper program beyond its deadline in late September with a further six months to March 202 1 to continue providing financial assistance to businesses and not-for-profits that continue to be significantly impacted by the coronavirus.
Under the changes, the payment rate will be reduced and a lower payment rate will be introduced for those who work fewer hours.
From 28 September 2020 to 3 January 2021, the rates will be:
- $1,200 per fortnight for all eligible employees with 20 hours or more a week on average in the four weeks of pay periods before either 1 March 2020 or 1 July 2020
- $1,200 for eligible business participants who were actively engaged in the business for 20 hours or more per week on average
- • $750 per fortnight for other eligible employees and business participants
From 4 January 2021 to 28 March 2021, the rates will be further reduced to:
- $1,000 per fortnight for all eligible employees who were working in the business or not-for-profit for 20 hours or more a week on average in the four weeks of pay periods before either 1 March 2020 or 1 July 2020, and for business participants who were actively engaged in the business for 20 hours or more per week on average
- $650 per fortnight for other eligible employees and business participants
Apart from the reduced subsidy, the eligibility requirements have also become more stringent. To be eligible for the extended program, businesses and not-for-profits will need to show proof of decline in turnover (using actual GST rather than projected GST turnover):
- 50% for those with an aggregated turnover of more than $1 billion
- 30% for those with an aggregated turnover of $1 billion or less
- 15% for Australian Charities and Not for profits Commission-registered charities (excluding schools and universities)
To be eligible for the JobKeeper Payment from 28 September 2020 to 3 January 2021, businesses and not-for-profits will be required to reassess their eligibility with reference to their actual GST turnover in the September quarter 2020.
To be eligible for the JobKeeper Payment from 4 January 2021 to 28 March 2021, businesses and not-for-profits will have to further reassess their turnover and must demonstrate that they have met the relevant decline in turnover test with reference to their actual GST turnover in the December quarter 2020.
A Flaw in the System?
Under the new rules, almost three-quarters of a million employees of companies that receive wage subsidy were laid off because they were ineligible. This comes after the exclusion of 1.1 million short-term casual workers and 1 million temporary visa-holders from the wage subsidy.
While some people believe that the tightening of JobKeeper eligibility criteria would mean that the people who really need support will be targeted, others believe that it excluded the vulnerable people in the country.
“JobKeeper was designed in a way that deliberately excludes whole sections of the community, including some of the most economically vulnerable people in the country," says David Richardson, a senior research fellow at the Australia Institute.
"Too many workers in highly casualised and insecure industries, such as arts and entertainment, hospitality, retail and accommodation have been intentionally overlooked by this scheme and now we are seeing the consequences in black and white.”
Despite the opposing opinions on JobKeeper, one fact remains the same: Helping small businesses thrive helps the economy recover.