We have all discussed it at the dinner table......What happens once JobKeeper finishes?
The one thing we can say with certainty is that nobody really knows. When the pandemic hit us in March 2020 you had experts predicting doom. Honestly, you couldn’t blame them for thinking that. We simply didn’t know how things would unfold.
Fast forward 12 months and some industries and our clients have had the best 12 months trading in their history. Look at property….it was predicted to plummet and they are now predicting further increases. The share market did plummet but is now back at pre Covid levels.
Unfortunately for some clients, it’s been the reverse as their respective industries have been savagely hit, such as tourism and hospitality.
A tremendous amount of stimulus was injected, primarily by the Federal Government and this has gone a very long way to keeping the economy afloat and markets buoyant. Factor in increases in JobSeeker and people accessing their superannuation, and that adds up to a lot of circulating money. We couldn’t travel overseas, so a lot of money stayed in Australia and you’d have to think was spent on things such as spas, pools, cars, home renovations.
Outside of the most recent lock down in Victoria, it does seem like we have the ability to control the virus. The vaccine we hope will also keep the virus at manageable levels.
So what will happen when JobKeeper ends?
Opinions range from “business as usual” to “falling off a cliff.”
We believe that a lot boils down to confidence, but again no one really knows. However, it would be safe to assume that a reduction in the Government stimulus the size of JobKeeper will have some sort of impact. The degree or severity of that impact is the unknown.
Inevitably some businesses will find it difficult to fund their wages once JobKeeper ceases and hence may need to lay off staff. This can have a domino effect with rising unemployment.
Do you need to start considering layoffs or a reduction in hours is a question many will ask themselves in the coming months.
Some businesses have been trading only due to JobKeeper and may decide to pull the pin once the subsidy stops. Sounds bizarre but it’s very true.
On the flip side, are your customers/clients reliant on JobKeeper and what does that mean for your business? It’s difficult to know that information but it needs to be considered.
We urge all our business clients to look beyond March and identify any potential threats and perhaps opportunities.
As always, we are here to help, so please feel free to call us.