SYDNEY – Australia’s unemployment rate jumped to the highest in about two decades in May as nearly a quarter of a million people lost their jobs due to the COVID-19 pandemic-driven shutdowns.
Employment in May plunged a further 127,000 after a record slump of about 600,000 in April, figures from the Australian Bureau of Statistics (ABS) on Thursday showed.
The unemployment rate shot up to 7.1%, the highest since October 2001, from an upwardly revised 6.4% in April.
The participation rate dropped to 62.9% from 63.6% in April as fewer people went looking for work due to the government’s wage subsidy scheme which allowed businesses to keep staff on their payrolls.
That meant fewer people than expected were counted among the unemployed. The jobless rate would have been even higher at 9.6% had people not stopped looking for work, the ABS said.
The figures highlight the economic damage wrought by the COVID-19 pandemic as mobility restrictions forced businesses to cease operations since late March.
Australia is facing its first recession in nearly three decades with the country’s central bank predicting the jobless rate to hit 10% by June and stay elevated through 2021.
The Reserve Bank of Australia (RBA) has gone all-in by cutting rates to a record low of 0.25%, flooding the financial system with cash and even buying government bonds to lower borrowing rates for business.