Announced on March 31, 2020, Australia’s $79.85 billion wage subsidy program offers a lifeline not only to businesses under financial strain but also to workers who have already lost their jobs. Employees previously terminated can still receive the $1,500 bi-weekly payment through their former employer, provided that business can demonstrate a 30 percent drop in revenue. This feature transforms the job keeper allowance into a tool for rehiring, not just retention.
The total stimulus package now reaches approximately $197 billion, equating to 16.4 percent of Australia’s gross domestic product. Prime Minister Scott Morrison described the initiative as critical to preventing business collapses and preserving the workforce.
The underlying rationale is straightforward: if companies shut down, the jobs they provide are permanently lost. The job keeper allowance aims to buy a six-month window of stability. Eligibility hinges on a single financial threshold.
Any business able to show a 30 percent revenue decline qualifies, with no sector explicitly excluded. The policy covers workers across industries hit by lockdown orders, including hospitality, retail, tourism, and construction.
The government pays the wage directly, the employer keeps the worker on the books, and the worker receives a steady paycheck. This arrangement is designed to prevent mass unemployment by maintaining the legal employment relationship, even when no work is available. In practical terms, a restaurant that has closed its doors can still pay its waitstaff.
A retail shop with no foot traffic can retain its sales clerks. A tour operator with no tours can keep its guides.
Without the subsidy, termination notices would be issued. Laid-off workers would then join the unemployment queue, drawing on different government payments and losing their connection to the labor market. The six-month duration aligns with the government’s expectation that the worst economic disruption from the pandemic will be acute but temporary. The assumption is that by September 2020, enough restrictions will lift for businesses to resume normal operations.
If that timeline slips, the program may need extension, though no contingency has been announced. Wage subsidies on this scale carry inherent risks.
Companies that would have failed anyway are kept alive, and workers are tied to employers with uncertain futures. The policy does not distinguish between a viable business facing a short-term cash crunch and one that was already insolvent before the pandemic. The 30 percent revenue loss test is the only filter, with no assessment of long-term viability.
Administrative challenges also arise. Businesses must apply, prove their revenue decline, and process payments to employees.
This paperwork burden falls heavily on small enterprises with limited accounting staff. The government has not detailed how quickly applications will be processed or how disputes over eligibility will be handled. Payment delays could undermine the program’s purpose.
For workers already laid off before the announcement, the job keeper allowance offers a path back onto payrolls, but it depends on the former employer choosing to participate. There is no requirement for companies to rehire.
The incentive is the subsidy itself—$1,500 per employee every two weeks. For a business with no revenue, that money covers the wage cost and nothing else. Whether that is enough to prompt rehiring will vary by company.
The job keeper allowance is the third tranche of stimulus, following two earlier packages in March focused on direct payments to individuals and business support. This one is larger and more targeted, aiming to preserve the structure of the labor market so that when the health crisis recedes, the economy can restart quickly.
The cost is enormous, but the gamble is that the alternative—mass unemployment, business bankruptcies, and a prolonged recession—would be more expensive still.
