But overblown comparisons between this crisis and the onset of Depression-era suffering are counterproductive. This risks stoking fear and panic when shoring up the social fabric requires reassuring the community that everyone is going to be helped to get through to the other side of what is a severe but still temporary crisis.
Unemployment in Australia during the Great Depression peaked at 32 per cent in 1932. This was three years after the Wall Street crash of October 1929. That is how prolonged and devastating the economic breakdown of the 1930s was, throwing hundreds of millions of people worldwide into long-term joblessness.
The great coronavirus crisis is a different beast all together. The temporary health shutdown has decimated the tourism, travel, hospitality and entertainment sectors, leading to large-scale layoffs of staff for whom there is literally no work. But the short, sharp virus shock is a severe disruption, by no means yet a disaster on the scale of the Depression.
It appears to be more of the scale of the most recent episodes of double-digit unemployment in Australia. A union-driven wage blowout collided with the end of Australia’s previous resources boom to produce the recession of the early 1980s. An asset price boom in the wake of financial deregulation and a 17 per cent Reserve Bank cash rate drove another one a decade later.
Compared with these internally generated recessions, this crisis appears time-limited by the restrictions needed to contain the spread of the virus. When the quarantines and social distancing restrictions can be lifted and the tourists and customers can come back, the economic crisis will end as well.
Also different to the 1930s is the super-charged safety net to support the unemployed. So too are the stimulus measures that have been quickly established to cushion the blow and build a bridge over the economic chasm that will fairly share the losses, protect jobs, and help as many businesses as possible survive.
The extraordinary measures rolled out to provide cash flow payments, emergency credit guarantees, and regulatory relief to keep businesses connected to the economy – and workers connected to business – all aim to minimise the long-term unemployment risks by allowing still-standing employers to quickly reconnect with laid-off employees when the crisis ends.
Just as financial regulators and banks are taking emergency measures to keep businesses and households financially afloat, Australia’s overly intrusive workplace regulations need to be urgently relaxed in order to keep people in jobs. Hence the United Workers Union has agreed with the Australian Hotels Association to relax restrictive work practices, such as on job classifications and minimum hours, to preserve some employment in a pubs sector confronting massive job losses.
Amid the startling appearance of physical dole queues, the ACTU must get the message by dropping its demand for a 4 per cent increase in the minimum wage. These extraordinary circumstances must surely require the Fair Work Commission to suspend its minimum wage case – which would push up the wage floor for people earning up to $100,000 a year – in order to help business hold Australia and its workforce together through this crisis.