The New South Wales (NSW) JobSaver program was a job retention scheme that supported businesses and workers during the 2021 COVID-19 lockdowns by subsidising a proportion of firms’ payroll expenses. But like the federal JobKeeper program, it may have preserved jobs during the lockdown at the cost of poorer future labour market outcomes for the workers that were covered. 

At a cost of $7.2 billion, the scheme was also a significant fiscal outlay for the government. 

Job retention policies like JobSaver are often justified on the basis that they protect high match quality jobs but this paper finds: 

• Workers covered by JobSaver tended to be younger, lower paid and spent less time with their employers, which are characteristics that are unlikely to be associated with high match value jobs.
• When comparing workers at firms with similar characteristics, workers supported by only JobSaver were around 10 per cent less likely than unsupported workers to stay at their jobs post-pandemic, which indicates that these jobs may not have had high enduring match value.
• Workers who were covered by both JobKeeper and JobSaver experienced worse post-pandemic earnings outcomes on average, earning $3,000 less the year after the pandemic than other groups of workers, even after controlling for observable worker and firm characteristics. This may indicate that job retention schemes tied workers to unsuitable jobs with worse earnings trajectories. 

Due to the limited evidence of high match quality jobs being saved, losses to household income from higher unemployment during future economic downturns may be better addressed through traditional income support programs rather than job retention schemes. And if job retention schemes had to be part of the policy mix, they should be in place for as short a period as possible to limit the negative effects. 

Program design also matters. The JobSaver program did not have the same strict retention effects compared to the JobKeeper program, which preserved productivity-enhancing labour mobility, potentially mitigating some of the negative effects of the wage subsidy.