COVID-19 and the growing recession concentrated in the services sector will not just increase social inequality, but accelerate the growing spatial divide in our cities. As our new research report shows, the pandemic’s impacts reinforce the ongoing trend towards the suburbanisation of inequality.
There are two reasons for this. First, the industries vulnerable to the economic impacts of COVID-19 lockdowns rely heavily on low-wage, part-time employment. Second, the inner suburbs are home to the largest concentration of COVID-vulnerable workers.
If we do not act now, more people will get pushed out of inner areas rich in jobs and amenities to lower-cost outer suburbs with poor access to jobs and community services.
Our research analyses where people employed in the industries most vulnerable to COVID-19 lockdowns live and the kind of work they do. We map vulnerable employment areas in all suburbs of Australia’s five largest capital cities. We then examine the characteristics of people in vulnerable employment living in all suburbs of Australia’s current coronavirus hotspot, metropolitan Melbourne.
We define vulnerable employment based on a detailed review of industries with one-third or more firms reporting reduced worker hours one week after the first COVID-19 lockdown (March 30 2020). These firms are mainly in the consumer, travel and community services sectors. They employ people working in accommodation and food, arts and entertainment, education, “non-essential” health care, retail and transport.
We profile the characteristics of vulnerable workers in each of these sub-industries and by suburb. We classify suburbs (using SA2 level data from the Australian Bureau of Statistics) by share of vulnerable employment based on the worker’s place of usual residence.
As the map below shows, the largest shares of vulnerable workers live in Melbourne’s inner suburbs.
Vulnerability levels clearly diminish moving outward from the city centre. In other words, many vulnerable workers live in some of the highest-rent suburbs.
On average, the share of vulnerable workers in the very high vulnerability suburbs is 32.2% of employed residents. The figure exceeds 40% in some of these areas.
Living in the inner suburbs, combined with the nature of their jobs, puts many COVID-vulnerable workers at high risk of displacement.
In the very high vulnerability suburbs, 47% of vulnerable workers are on low or very low incomes. And 54.3% work part-time (less than 38 hours a week). A large proportion (41.9%) are aged under 30 and about one-third are 30-44.
In fact, over half (53.5%) of the vulnerable workforce living in very high-vulnerability suburbs hold jobs in the most precarious, low-wage consumer services industries – accommodation and food services and retail and personal services. Another 30% work in arts, entertainment and education.
Suppressed consumer demand will not only have short-run employment impacts, but might permanently alter consumption patterns. The result would be enduring business closures and job losses for workers who live in these areas.
To make ends meet, many of those facing job loss and other employment pressures such as reduced hours will seek more affordable housing in the middle and outer suburbs.
However, although the outer areas are now home to the smallest proportion of vulnerable workers, the vulnerable workers that live there tend to be worse off. Just over 66% are on low or very low incomes and 60% work part-time.
As a result, the migration of COVID-vulnerable workers to the outer areas will add to the existing concentration of spatial inequality in Greater Melbourne.
COVID-19 puts people working in low-end service jobs and the creative and educational services at high risk of losing their jobs. Those who manage to live in the high-cost inner suburbs are now particularly vulnerable.
It is therefore crucial to expand rather than retract the JobKeeper and JobSeeker programs. Proposed cuts to JobSeeker are estimated to push 370,000 Australians into poverty, 123,000 in Victoria alone. In tandem, we need interim policy in the rental housing market to defuse the impending “rent bomb” of tenants facing eviction if they can’t pay the accumulated debt of deferred rent.
Longer-term strategies are also needed. We must confront the reality that many service sector jobs will not return.
This requires investment in skills-building courses tied to strengthening the recovery of TAFEs and universities, particularly in areas like “essential manufacturing” – medical supplies, recycling, food – and communications technologies. JobTrainer is a good start.
Given the spatial dimensions of the crisis, place-based programs are crucial too. Preserving inner suburban industrial land can play a significant role in small enterprise start-ups, firm expansion and job creation. Inner industrial districts provide a flexible mix of space that allows businesses to grow and add quality jobs in place.
At the same time, policymakers can better develop community infrastructure and employment hubs in the outer suburbs. Community hubs provide flexible, multipurpose spaces that cater to various community needs. These services range from youth, aged care and health facilities to collaborative workspaces and settings for workforce training providers.
While COVID-19 is clearly taking an immediate toll on the health and economies of our cities, we need a conversation about the longer-term impacts and responses.
We are all living through a major historical event, a once-in-a-century pandemic that has radically changed how we work, learn, travel, socialise and spend our free time.
But for many of us juggling working from home, schooling at home and Friday night Zoom drinks, this is a period likely marked by memory failures. We forget who said what, who was at which meeting, what tasks and appointments we have, and even what day it is.
Why doesn’t our memory serve us well in this pandemic? Anxiety may be one explanation, but another reason comes from the way our memory works.
Recalling specific details from particular past events – such as who was at last Friday’s drinks, and who was there the week before that – is a complex mental feat.
Distinctive cues for a particular event might include the physical surroundings, people, tastes, sounds, smells, or the weather.
We remember which friend was at drinks because we recall details of the location – the bar we were at, where each person was sitting, what we were eating, and so on. This context helps us place the right person in that situation when we recall it later.
We remember who said what in a work meeting because we can visualise where they were sitting. We remember what day it is because we have landmarks in the week that remind us: karate lessons, choir practice, Friday afternoon traffic.
Unfortunately, the pandemic has erased many of these cues. Many of us have instead been spending time sitting at our computer when ordinarily we might be at work or elsewhere. And this could leave us less able to distinguish events from one another.
Our memories are designed to focus on things that are new or distinctive. This means we are more likely to remember events when they are accompanied by a change in our environment, such as an overseas vacation. Conversely, we tend to merge events that are broadly similar.
This is useful as it helps us keep track of events in a systematic and useful way, without needing to perfectly record all the details of every event.
But in lockdown we don’t have physical transitions to differentiate one event from the next. We no longer walk between meetings or commute from the office to home. Many different events now share the same context (staying at home), which means your memory tends to blur them together.
Once we understand that our memories are going to find the current circumstances challenging, there are things we can do to improve the situation.
One way is to make an effort to create distinctive cues where possible. Can we all wear silly hats for our Friday night drinks (or board meetings)? Can we hold work meetings for different projects in different rooms of our house?
Ask someone different each time to chair recurring meetings? Going for a walk during meetings where we only need to listen can create a new set of physical cues to associate with what is being said.
Another way is to rely more heavily on our external memory systems: diaries, calendars, notes and records. Accepting that our internal memory might fall short means we can compensate by deliberately using tools and resources to store the information on our behalf.
These systems can later act as contextual memory cues too. For example, we can add a screenshot to our video meeting notes to record who was there and their location on the screen.
These kinds of recommendations are often given to people who experience memory failures for other reasons, such as brain injury.
But similar principles might help all of us whose internal memory resources are not designed for spending our time almost exclusively in one place.
When embracing external memory systems, it is important to ensure they are readily accessible and always accurate, so we can trust them completely and be sure of getting the reminders we need.
Working from home is the new normal for many of us. Developing new strategies that support our memory performance might help reduce the number of things we forget, and stop our recollection of the COVID-19 times turning into an amorphous mush.
Papua New Guinea
Creative destruction “is the essential fact about capitalism”, wrote the great Austrian economist Joseph Schumpeter in 1942. New technologies and processes continuously revolutionise the economic structure from within, “incessantly destroying the old one, incessantly creating a new one”.
Change happens more quickly and creatively during times of economic disruption. Innovations meeting material and cultural needs accelerate. Structures preventing new, more efficient technologies weaken. As the old economy collapses, innovations “cluster” to become the core of the new economy.
Over the past three centuries there have been five great “waves” of economic disruption and clustering. The first was driven by harnessing water power, the second by steam power, the third by coal and electricity, the fourth by oil and gas, and the fifth by digital transformation.
We are now at the start of the sixth great wave, driven by renewable energy combined with electromobility and smart-city technology.
Though 2020 will be a difficult year for the entire economy, these technology trends are faring much better than the old-energy sector. Over the longer run the COVID-19 economic disruption should accelerate the wave.
In renewable energy, solar photovoltaics and onshore wind are now the most economic new form of electricity generation for at least two-thirds of the global population, according to energy research provider BloombergNEF.
In Australia, the latest analysis of electricity generation costs by the Australian Energy Market Operator and CSIRO shows solar photovoltaics and wind are already cheaper than coal and gas. Solar PV costs are also predicted to fall sharply over the next decade, reducing its generation costs from about A$50 a megawatt hour to A$30 by 2030.
The following graph for renewable energy and coal consumption in the United States shows the acceleration towards renewables is well underway.
Statistics published last week by the US Energy Information Administration show in 2019 coal production fell to its lowest level since 1978. In 2020 coal production is projected to fall to 1960s levels.
Across all member nations of the Organisation for Economic Cooperation and Development (including Australia), the International Energy Agency’s latest monthly statistics show coal production in April was down 32% on April 2019. Electricity generation from all non-renwables was down 12%. But generation from renewables was up 3%.
Electromobility encompasses electric vehicles including cars, buses and trackless trams. Globally, BloombergNEF projects electric vehicles to comprise 3% of new passenger car sales in 2020, 10% in 2025, 28% in 2030 and 58% in 2040.
Leading the charge is Europe, where sales of electric vehicles actually increased 7.5% in the first quarter of 2020, bucking the global downturn for electric cars and the industry overall.
The only major car maker to increase sales was Tesla, selling 88,496 cars. Its second-quarter sales of 90,650 cars was just 5% down on a year ago, compared to falls of about 25% for other makers. Tesla’s booming share price saw it overtake Toyota in May to become the world’s most valuable car maker.
Smart-city technology involves using sensors, machine learning, artificial intelligence, block-chain and the “internet of things” to improve infrastructure efficiency. They have been growing in use for transport, energy and housing.
Road sensors can help traffic managers coordinate traffic signals to cut congestion or to guide fast electric buses and trackless trams through traffic. Apps help us navigate through cities, and to know precisely when buses or trains are due.
In energy grids, smart technology can be used to balance electricity supply and demand, and to create low-cost and localised electricity markets.
In housing, smart systems can improve all aspects of a home’s energy and environmental performance.
Curtin University has partnered with Western Australia’s land development agency to integrate these technologies into the East Village housing project in Fremantle. It will use blockchain technology to leverage photovoltiacs, batteries, electric vehicles and water heating in a micro-grid supplying 100% renewable power to a community of 36 homes. This cluster of innovations are modular, so developers can experiment and then scale up.
The economic and cultural benefits of renewable energy generation, electromobility and smart-city technologies are clear. They will led to a cleaner, greener economy with many more new jobs.
Together I estimate they have the potential to reduce the use of fossil fuel by 80% in a decade.
Eliminating the last 20% – gas and coal used in industrial processes such as steel production and mineral processing, and fossil fuels used for long-haul road, sea and air transport – will be harder.
But hydrogen made with renewable energy can potentially replace fossil fuels in all these applications, though developing and commercialising the technology and needed infrastructure will likely take a decade or more.
Australia is already a global leader in uptake of solar generation and battery storage. We are also doing well in smart city technologies. But we have been slow in electromobility, and we will need to invest more in hydrogen research, development and deployment.
The only thing that will put the brake on these technologies becoming the core of the new economy sooner rather than later are backward-looking government policies that seek to prop up an obsolete fossil-fuel economy.
With Victorians heading into a new round of even harsher lockdown measures, there will again be a focus on how people will cope — the various ways such restrictions change lifestyles and how we adapt to them.
New data from the Australian Bureau of Statistics provides a snapshot of how Australians changed their behaviours, activities and consumption patterns as people were forced to stay home during the country’s first COVID-19 lockdown earlier this year.
To understand how the virus affected people’s everyday lives, the ABS ran a fortnightly survey with the same group of 1,000 people from April 1 to July 10. Here are some of the key findings.
Lockdown restrictions began to be implemented in Australia from mid-March. Not surprisingly, in the first ABS survey in early April, respondents reported some immediate changes, such as a loss of contact with other people.
Just under half of people reported having no in-person contact with friends or family outside their household. Nearly all had used phone and video calls and text messages to keep in touch.
By mid-April, financial hardship was also starting to set in for people. Nearly a third of respondents reported their household finances had worsened due to COVID-19.
People’s mental health was also beginning to suffer by mid-April. Compared with a pre-COVID health national survey of Australians, twice as many people reported feelings of anxiety at some point. One in nine Australians also felt hopeless at least some of the time.
More women and younger people reported these feelings compared with men and people aged 65 years and over.
Survey results from early May 2020 began to show how people were adjusting their lifestyles to the new routines. Restrictions had just started to ease slightly at this point.
Findings from this stage showed some gender differences. Women (56%) were more likely to be working from home compared with men (38%). Perhaps related to this, women were also more likely to be feeling lonely than men (28% compared with 16%).
The ABS found some notable changes in consumption habits. The early May survey showed fewer people were purchasing additional household supplies (21%) compared with March (47%), suggesting panic-buying had subsided.
People were spending their money on other purchases instead. From early April to early May, one in five people reported eating more snack food, while 13% of respondents were eating more fruit and vegetables.
Purchase of takeaway or delivered food declined over this period, with almost a third of respondents reporting less frequent consumption.
Perhaps contrary to popular belief, the overwhelming majority of people were not drinking more in isolation. Just 14% of people reported increasing their alcohol consumption.
During the early May phase of the lockdown, people were also seeking solace in home-based activities.
Though a majority of people (60%) were reporting more time on screens during lockdown, others were turning to hobbies and other activities.
Forty-one percent of respondents said they were spending more time on household chores and other work around the house and garden: for instance, 39% were doing more reading and crafts, and 38% were spending more time cooking or baking.
When it came to physical health and exercise, though, just one in four people had increased their level of physical activity during lockdown, while one in five had actually spent less time exercising.
As more restrictions began to ease around the country, people began to think about what they would do once lockdown ended. By late June, Australians’ mental health had improved compared with the height of the lockdown in April.
Fewer people reported feeling stressed, lonely, restless, nervous or that everything was an effort.
More than 90% were still keeping their distance from others, but fewer were avoiding social gatherings.
Interestingly, the easing of restrictions did not change other lifestyle routines that significantly: many people were still spending a lot of time on screens and with pets, cooking, baking and online shopping compared with before the lockdown period.
When the final ABS survey was conducted in early July, things were looking brighter for most Australians.
Three in five respondents reported their mental health status as good or very good. Most people had an optimistic outlook on the future, with over half believing life had already returned to normal or would return to normal within six months.
The big exception was people living in Victoria. In late June and early July, Melbourne had begun to experience a second wave of infections and a re-introduction of restrictions.
Not surprisingly, only 2% of Victorians said their life had already returned to normal or had not changed due to COVID-19.
The ABS has finished this survey, but is starting a new monthly survey in August, with a new group of respondents. This survey will also focus on Australians’ everyday lives and well-being during the pandemic.
There are also many university-based social research projects currently underway. Once completed, their findings will provide a more detailed picture of how life has changed in Australia during COVID-19 — a situation that continues to evolve day by day.
The announcement of stage 4 restrictions in Victoria marks a new, and depressing, stage in Australia’s response to COVID-19.
The new measures will close non-essential retailers and most child-care centres across Melbourne, and impose stringent controls on industries such as meatworks and construction. The Victorian government estimates the measures will stop a further 250,000 workers from travelling to work.
The Victorian economy will probably be better off with this sharper, hopefully shorter lockdown than persisting with Stage 3 restrictions for many months.
The federal government has taken the sensible step of announcing pandemic leave disaster payments of $1,500 for those Victorians that need to isolate for 14 days. But it will need to do more to help Victorian businesses and households make it safely to the other side.
Even before Sunday’s announcement of Stage 4 restrictions, economic activity in Melbourne was back down to similar levels to the first shutdown. Movement around the city, as measured by the number of times people used Apple Maps to get directions, was about half its February level.
By comparison, in Perth (where the virus has been effectively suppressed) drivers were out and about a little more than in February. Sydney was more or less back to normal, with a slight dip at the end of July as people curtailed their movements a little. Across all three cities public transport use remains dramatically below its normal levels, with Melbourne much further away from normal than Sydney and especially Perth.
The number of jobs in Victoria was 7.3% lower in mid-July than in mid-March, a deeper fall than any other state. In inner Melbourne, the number of jobs was down nearly 10% from mid-March levels. Eight of the ten federal electorates hardest-hit by job losses are now in Victoria. Without JobKeeper, the picture would be much worse.
Under the new restrictions on workplaces in Melbourne, employment in construction, manufacturing and retail will plummet. These industries employ about 900,000 Victorians between them. Not all of these people will be thrown out of work, but many will.
The federal government should reconsider its plans to begin winding back JobKeeper and JobSeeker payments after September. JobKeeper is set to fall from A$1,500 to A$1,200 for full-time workers, and to A$750 for part-timers. And JobSeeker falls from $1,215 to $815 a fortnight.
These income-support programs were absolutely necessary in March when Stage 3 restrictions were imposed. They are even more necessary now, as Stage 4 restrictions put an even tighter clamp on economic activity, stretching many businesses to breaking point and throwing more Victorians out of work.
How to get both JobKeeper and JobSeeker
The “tapering” of these support payments clearly cannot happen from late September, as currently scheduled.
By the end of September Victoria will hopefully be out of Stage 4 restrictions. But at best Melbourne will be back to Stage 3, the same level of restrictions for which the federal government to introduced the JobKeeper and the JobSeeker schemes.
The eligibility rules for JobKeeper should also be reconsidered.
Some businesses whose revenue did not fall enough to qualify for JobKeeper in March will now take a bigger hit. Other companies that qualified in March but saw a rebound in June will be excluded by the current rules from receiving JobKeeper beyond September.
The federal government COVID-19 “disaster payment” should help address the crucial problem of those without paid leave entitlements being forced to choose between self-isolating and going to work to pay their bills. But the scheme is palliative rather than preventative, since it only applies in states once community transmission has ramped up to disaster levels.
The diverging fortunes of Victoria and the rest of Australia gives new meaning to the term “two-speed economy”.
The federal government may be reluctant to do what’s needed just for one state, given the recovery is progressing elsewhere, but that would be a mistake. Victoria accounts for one quarter of the national economy. There is no “moral hazard” here. No state is going to allow thousands of its citizens to catch a deadly virus on the expectation the federal government will turn on the fiscal taps.
The federal government should waste no time wrangling over who pays the costs of getting through the crisis. Trying to split the bill with Victoria will take valuable time, and only concentrate costs on the state hardest hit by the crisis.
Last week the federal government finalised arrangements to borrow A$15 billion through issuing 31-year bonds. These bonds have a fixed interest rate of 1.94%, below the bottom of the Reserve Bank’s inflation target band.
That means investors buying the bonds were willing to lend money to the federal government and most likely get back less, in inflation-adjusted terms, three decades from now. And investors were queuing up to buy them. In fact the government could have sold A$37 billion worth, rather than A$15 billion.
The federal government should use this ample fiscal firepower to ensure Victorians get through this crisis. Australia’s economy won’t recover unless Victoria does too.