Australia Is In A K-Shaped Recession

Australia is experiencing a ‘K-shaped’ government-induced recession from the lockdown measures. The public sector are thriving and growing on the upward arm of the ‘K’, but the private sector continues to suffer on the downward arm of the ‘K’, an analysis by free market think tank the Institute of Public Affairs shows.

The analysis, based on Australian Bureau of Statistics data, shows that while 572,700 jobs have been destroyed in the private sector since 14 March, 22,100 jobs have been added in the public sector. This translates into almost 26 jobs lost in the private sector for each job created in the public sector.

“Australia’s ‘K-shaped’ recession shows we are living in two Australias with wealthy, protected bureaucrats who are flourishing, and those in the productive, private part of the economy who are getting smashed”, said Cian Hussey, Research Fellow at the Institute of Public Affairs.

“This is a purely private sector and small business recession. Bureaucrats have never been better off.”

“Bureaucrats and unelected health officials have not incurred any of the costs of their reckless lockdown measures, yet they decide when and how the private sector workforce can go back to work.”
“Small businesses, young Australians, and the self-employed have been hammered by the lockdown measures. Meanwhile, politicians and bureaucrats who say ‘we are all in this together’ have never been so well off. Few have lost their job, and many have received extraordinarily tone-deaf pay rises since March.”

“Australia’s robust and egalitarian liberal democracy is at risk. Before COVID, trust in politicians and satisfaction with democracy had been declining sharply. If this ‘K-shaped’ recovery continues, mainstream Australians will rightly grow more disenchanted with the out-of-touch and condescending elites in the protected public sector,” said Mr Hussey.

The IPA recommends a freeze on all public service wages and hiring across the country until the unemployment rate drops below 5%.

Previous IPA research found that while private sector wages decreased by $5.9 billion in the June quarter, public sector wages increased by $768 million.