810,000 Small Businesses And 1.7 Million Jobs At Risk From Lockdowns

Written by
8 September 2020

Institute of Public Affairs analysis of data recently released by the Australian Bureau of Statistics finds that over 810,000 small businesses are at risk of closing and approximately 1.7 million jobs are at risk of being lost over the next three months due to the lockdown restrictions which remain in place across Australia. This could potentially cause the official unemployment rate to rise from 7.5% to 20%.

According to ABS data, 35% of small businesses (defined as employing fewer than 20 employees) reported that it will be difficult to meet financial commitments over the next three months. This equates to 810,000 of the 2.3 million small businesses across Australia.

This is compared to 18% for large businesses (defined as employing more than 200 employees), or approximately 160,000 large businesses out of the total of 885,000.

Small businesses employ an average of 2.1 employees, meaning that 1.7 million Australians are currently employed in a small business which has reported difficulties in meeting their financial commitments over the next three months.

Should all of those small businesses which have reported that it will be difficult to meet their financial commitments over the next three months cease to operate as a result of those financial difficulties, then 1.7 million additional Australians will become unemployed on top of the 1 million Australians who are already unemployed.

This would bring the total number of unemployed Australians to 2.7 million, and the official unemployment rate would rise from 7.5% to 20%.

“The lockdown measures are smashing small businesses and jobs across Australia, many of which will never return,” said IPA Research Fellow Kurt Wallace.

“The lockdown measures are undermining the ability of Australians to experience the dignity of work and build and run their own business.”

“Small businesses embody the dignity of work, aspiration, resilience, community, and reward for hard work and merit. They are the very core of the Australian way of life,” said Mr Wallace.

Note: ABS data is from 5676.0.55.003 – Business Indicators, Business Impacts of COVID-19, August 2020. The unemployment estimate is calculated by assuming the 1.7 million Australians affected by potential small business closures move from being ‘employed’ to ‘unemployed’ as defined by the ABS, based on labour force data from July 2020.

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Kurt Wallace

Kurt Wallace is a Research Fellow at the Institute of Public Affairs

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