Forty-seven per cent of firms said they had been forced to change their workforce arrangements.
Of that group, a quarter of small firms employing fewer than 19 people had reduced staff working hours. Two in five firms with between 20 and 200 staff had reduced hours while 34 per cent of large firms had done the same.
Twenty per cent of staff working in medium or large firms had been stood down or forced to go on leave without pay.
Hospitality workers have taken the biggest hit, with 70 per cent of firms in the sector reducing staff hours and 43 per cent putting staff on unpaid leave.
Even within the health sector, which in some areas has put on staff, 44 per cent of firms have reduced hours while 17 per cent have put staff on unpaid leave. Healthcare is the nation’s largest employer, accounting for almost 1.8 million workers.
RBA governor Philip Lowe, following a board meeting at which the official cash rate was kept at 0.25 per cent, said there was “considerable uncertainty” about the Australian economy and much depended on the time it took to control the virus and how long social-distancing measures remained in place.
“A very large economic contraction is, however, expected to be recorded in the June quarter and the unemployment rate is expected to increase to its highest level for many years,” he said.
The bank last month took interest rates to a record low and said it would buy government bonds in a bid to reduce national funding costs and extend a $90 billion credit line to banks to lend to small businesses.
The RBA has spent $36 billion buying state government bonds on the secondary market in a move that has pushed down interest rates on that debt. The federal government’s debt agency on Tuesday sold another $1 billion of debt, which will not be repaid until 2031, with an interest rate of 0.899 per cent.
Dr Lowe said the government’s actions and the RBA’s efforts would soften the expected economic hit and the country was well placed to recover once the health crisis had passed.
He made clear the RBA would not be lifting interest rates until progress was made towards “full employment”, which he has previously indicated is a jobless rate of around 4.5 per cent.
Consumers are hoping the government’s efforts to deal with the pandemic will ease some of their financial pain. The ANZ-Roy Morgan weekly measure of consumer sentiment jumped 10.1 per cent over the past seven days, its largest improvement on record.
Despite the lift, it only moved confidence to where it was at the depths of the global financial crisis.
BIS Oxford Economics chief economist Sarah Hunter said the cash rate could remain at 0.25 per cent until 2023.
“The cash rate is likely to remain at 0.25 per cent for at least the next three years, and quantitative easing is also likely to continue beyond the end of the pandemic, to ensure that the economic recovery (particularly in the labour market) is well-established,” she said.
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Shane is a senior economics correspondent for The Age and The Sydney Morning Herald.
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