$15bn hit to Melbourne’s economy… and counting
This morning I stopped at my usual neighbourhood café on my way to work. The family-owned business, a favourite for Richmond locals and businesses, should be packed with a line in front of the barista’s till. Instead, it’s empty. The crowds are gone, the streets are deserted, and the only thing left are upturned tables and chairs stacked neatly in the corner. Its 8:30 am and the barista informs me that I am the fourth customer she has seen all morning.
Working in the City as almost everything shuts down is an unnerving experience. Some of us in the office often work over Christmas when it’s quiet and you can catch up. The office is high up with a nice view over the city. There are people working, walking (well apart), there are cars and trams going by, but it doesn’t feel quite the same. Thousands of white-collar workers have deserted the city to work from home, while cafés and restaurants have let go casual staff and take no seated customers. Large retailers have closed down and Bourke Street Mall is empty.
Every day this week is another news article about the long lines outside Centrelink. The casual workers in hospitality, travel and retail are clearly suffering. The City of Melbourne’s Open Data Platform gives us insight into where these jobs are located and how many there are.
Geografia has been calculating and publishing economic data for the City of Melbourne for years now.
These calculations are based on the number of jobs recorded in the yearly CLUE surveys that are conducted by the City of Melbourne.
Assuming the following changes in job numbers due to COVID-19 for a 12-month period:
- 90% reduction in Retail, Accommodation and Food Services, and Arts and Recreation Services
- 50% reduction in Other Services
- 15% reduction in Professional, Scientific and Technical Services
We see a GRP figure of around $85bn. It was just over $100bn in 2018.
Kevin Johnson, our director, believes the job reduction assumptions are on the conservative side. Over the next few months, he expects the reverberations of the shutdowns to spread to other industries as consumer spending falls (from the job losses and insecurity), other industries feel the pinch (advertising and media for example) and, notwithstanding the Federal Government’s interventions, professional service firms begin laying off staff.
While the City of Melbourne’s grants, suspension of fees and the halving of rents for eligible tenants will go some way to easing the burden, we foresee more pain ahead.
(Thanks to Cesar for making the maps, and Kevin for his thoughts on Melbourne’s economy.)
