Working paper

Australia faces an unprecedented economic challenge in the coming weeks and months. Never before has such a large proportion of economic activity come to such a sudden stop. Never before has such a large slowdown been deliberately engineered as a matter of public policy – in this case, to protect public health during a global pandemic.

COVID-19 is already having a big impact on the livelihoods of many Australians. This is visible at Centrelink offices around the country, as people queue to be added to the income support rolls, and visible in the form of closed shopfronts in all Australian cities, suburbs, and towns. But the size of the employment shock from the COVID-19 response is not yet known and will not be known for weeks, even months. In this working paper, the authors estimate the hit to employment from mandatory and voluntary spatial distancing.

This research calculates that between 14 and 26 per cent of Australian workers – 1.9-to-3.4 million people – could be out of work in the coming weeks as a result of spatial distancing measures to contain the spread of COVID-19, if they aren’t already. More than half of all workers in the hospitality industry could be off work due to COVID-19. Many workers in retail trade, education and training and the arts are also at risk. Lower-income workers are twice as likely to be out of work as high-income earners. Younger Australians and women are likely to be hit hardest, because they are more likely to be employed in occupations and industries most affected by the response to COVID-19.

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Grattan Institute Working Paper No. 2020-03