Will the economy shed 100,000 jobs when JobKeeper payments stop?

JobKeeper payments end on 28 March and many are talking about what it will mean for the Australian economy. Here are a few insights.

Gretchen Kennedy

Gretchen grew up in a small Connecticut town where she learned to read The Wall Street Journal as part of the grade six enrichment program. She moved to Australia in 2002, earned a Master of Arts (Professional Writing) and went on to spend eight years writing on Wall Street. In June 2018, Gretchen returned to Australia and has since developed a keen interest in all things ASX. In December 2020, she started writing for the Motley Fool. Gretchen's usually writing something, reading a book or chasing her dogs around.

Published March 10, 2021 10:31 am AEDT

The Australian economy is prepping for a 28 March 2021 axe of the federal government's JobKeeper payment scheme.

The JobKeeper scheme has been a critical tool in battling the economic effects of the coronavirus.

Following the approval of US President Joe Biden's stimulus package, many Australians are wondering what comes after JobKeeper, and what its cessation means for the economy.

A man happily kisses a $50 note scrunched up in his hands representing the best ASX dividend stocks in Australia today — Image source: Getty Images

Economist predicts dramatic job losses

Today's The Australian features Commonwealth Bank of Australia (ASX: CBA) economist Nicholas Guesnon discussing his opinion about JobKeeper payments coming to an end.

Guesnon believes that up to 110,000 employees working in sectors still vulnerable to the economic impacts of coronavirus, like travel, are at risk of losing work. He estimates up to 25% of employees presently receiving the benefit could lose their job.

Guesnon further mentioned that he thinks the transport, arts and recreation, accommodation and food services sectors will suffer a blow in the coming weeks. This is due to these industries' association with and reliance on international travel, an important part of the economy that's been ravaged by the pandemic.

NSW Treasurer says JobKeeper payments must end

New South Wales Treasurer Dominic Perrottet supports the winding up of the JobKeeper scheme.

According to the Sydney Morning Herald, Perottet said:

We cannot continue to make decisions today that impact generations to come to pay back the depth of the circumstance we find ourselves in…

We need a proportionate and measured response.

Perrottet's guess at which sectors of the economy would feel the biggest hit from JobKeeper payments disappearing include construction, manufacturing, administration and tourism.

Foolish takeaway

Some economists, such as Su-Lin Ong at RBC Markets, aren't expecting anything too crazy to happen once JobKeeper payments end.

The Australian notes that she expects a short-lived disruption to the economy when unemployment numbers rise before they fall again.

But considering the stimulus packages that continue to be dished out around the world, the Australian Government may still be considering its next move after JobKeeper.

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