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.

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

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.

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.

Motley Fool contributor Gretchen Kennedy has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

People sit in rollercoaster seats with expressions of fear, terror and exhilaration as it goes into a steep downward descent representing the Novonix share price in FY22
Share Gainers

Here are the top 10 ASX 200 shares today

ASX investors had a rough end to the trading week this Friday.

Read more »

A panel of four judges hold up cards all showing the perfect score of ten out of ten
52-Week Highs

Big ASX news: 10 ASX 200 shares hit new 52-week highs today

Do you own any of these lucky stocks?

Read more »

Siblings jumping on a trampoline.
Share Gainers

These 3 ASX 200 stocks are charging higher this week. Own any?

Investors have been piling into these ASX 200 stocks this week. But why?

Read more »

A young bank customer wearing a yellow jumper smiles as she checks her bank balance on her phone.
Bank Shares

CBA shares: Another day, another new record high

What's behind CBA's latest push into record territory?

Read more »

Three guys in shirts and ties give the thumbs down.
Share Fallers

Why Beach Energy, McMillan Shakespeare, News Corp, and Pilbara Minerals shares are falling today

These shares are ending the week in the red. But why?

Read more »

A young woman holding her phone smiles broadly and looks excited, after receiving good news.
Share Gainers

Why Domino's, Nick Scali, REA, and Sigma shares are charging higher today

These shares are ending the week on a high. Let's see why investors are bidding them higher today.

Read more »

A young boy with a sombre face looks down at the zip fastener at the bottom of his jacket as he concentrates on unfastening the clasp.
BNPL shares

Should you buy the 34% dip on Zip shares?

After crashing 34% in a month, what’s next for Zip shares?

Read more »

A young man sits at his desk working on his laptop with a big smile on his face due to his ASX shares going up and in particular the Computershare share price
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »