Economy May 14

Nearly 600,000 Australians lose jobs as virus lockdown bites

Meanwhile, media group says Google and Facebook should pay 10% of ad revenue for use of local news reports

by AFP
Nearly 600,000 Australians lose jobs as virus lockdown bites
Prime Minister Scott Morrison sits with state premiers and the national health advisor to discuss policies implemented to counter the spread of the coronavirus. The PM has warned Aussies things are going to be 'tough' for some time. Photo: AFP 

Almost 600,000 Australians lost their jobs as the virus shutdown took hold in April, the steepest monthly drop since records began more than 40 years ago, data showed on Thursday.

The Australian Bureau of Statistics (ABS) said 100,000 people filed for unemployment benefits, while a further 500,000 left the workforce altogether.

Prime Minister Scott Morrison called the figures "terribly shocking", with the ABS reporting the under-utilisation rate – which combines unemployment and under-employment – reached a record high of 19.9% in April.

The ABS said 2.7 million people – one in five workers – either left the workforce or had their work hours reduced as the country recorded an "unprecedented fall" in the workforce participation rate to 63.5%. The drop in the participation rate meant unemployment rose a percentage point to 6.1 percent, well short of forecasts of more than 8%.

Just 12.4 million Australians now have jobs after the steepest monthly fall in employment since the ABS began recording monthly data in 1978.

Morrison warned Australians to brace for more difficult economic news in the months ahead, adding: "A very tough day. Terribly shocking, although not unanticipated. We knew there would be hard news as the pandemic wreaks an impact on Australia as it is on countries all around the world."

The Treasury has forecast the unemployment rate will reach 10% in the June quarter.

6 million on wage subsidy

Morrison said the number of people now covered by Jobkeeper, a A$1,500-a-fortnight wage subsidy programme paid to staff via their employers, now exceeds six million.

Australia has been one of the most successful countries in containing Covid-19, with fewer than 7,000 confirmed cases and 100 deaths out of a population of 25 million.

But restrictions on travel, public gatherings and retail businesses have had a devastating impact on the economy, slashing some A$4 billion ($2.5 billion) per week from economic activity.

Parts of the country have begun relaxing the restrictions, with some cafes, pubs and restaurants opening to small groups from Friday.

Google, Facebook 'should pay $400m a year'

Meanwhile, a leading publisher called on Thursday for Google and other tech giants to pay Australian news outlets some US$400 million a year under a mandatory code of conduct ordered by the government.

Australia last month announced plans to force Google, Facebook, and other internet firms to share advertising revenues earned from news content featured by their search engines.

In an initiative being closely watched across the world, the government is due to unveil in July details of the mandatory payments as part of a code of conduct for the tech giants' dealings with news media.

The chairman of Nine Entertainment, Australia's second-biggest media company, argued on Thursday that the payment should amount to 10% of the tech companies' advertising revenue in Australia – estimated by the government at some A$6 billion (US$3.9 billion) per year.

Peter Costello said the Australian Competition and Consumer Commission (ACCC) had determined that 10% of the tech firms' revenues derived from advertising on news content.

"So, if you apply those figures, Google and Facebook are taking about A$600 million of advertising revenue out... which otherwise could have, or should have, been going to media," he said in an interview with Nine's Australian Financial Review newspaper.

"They are essentially using the product which is created by news organisations without paying for it," he said. "In fact, using it to boost their own revenues and taking the advertising which otherwise would go to support that journalism."

The government said it was imposing the code of conduct after months of negotiations on a voluntary agreement with Google, Facebook and other companies failed to reach an agreement.

Google and Facebook protested the move and called for continued negotiations. Both companies also insist they have invested millions of dollars in initiatives in helping Australia's struggling news industry.

'Industry solution' 

Costello dismissed the need for further talks, saying the best way to address the issue is "an industry solution, where you sit down and try to estimate the value that Google and Facebook are getting from the use of this material. We think it's A$600 million a year".

"These are trillion-dollar corporates, it's not as if it's going to undermine their profitability if they had to pay A$600 million in revenue for copyright in Australia – and I hope they would see it that way," he said.

Google and Facebook have had a huge impact on Australia's news industry, capturing two-thirds of online advertising spending.

In response to falling revenues, Australian news outlets have slashed 20% of jobs in the last six years.

The crisis has only deepened in the economic and advertising downturn caused by the coronavirus pandemic, which has already forced the closure of many smaller news publishers.

If Australia is successful in its efforts to ensure more advertising revenue flows to publishers, it would be the first country to do so.

Australia's new regulations will also cover the sharing of data, and the ranking and display of news content, to be enforced by binding dispute resolution mechanisms and penalties.

An estimated 17 million Australians use Facebook each month and spend an average of 30 minutes on the platform a day, while 98% of Australian mobile searches use Google.