• Jobs & Services Australia

Self-employed Australians fear business collapse after coronavirus destroys income


Four-in-five self-employed Australians have reported their profits have taken a hit as a result of the Covid-19 contraction, with almost one third worried their businesses will not be viable in two months without improved conditions.


The ANU Centre for Social Research and Methods study, released on Monday, provides fresh impetus for those arguing to reopen the Australian economyand will play into political debate about whether to extend the jobkeeper wage subsidy scheme beyond September.

Based on a survey of a representative sample of 3,155 Australians in mid-April, the report found self-employed workers have suffered a higher reduction in hours worked and income than employees.


The longitudinal survey found 5.1% of self-employed workers said that the coronavirus had eliminated their profits completely, 21.6% said it had been reduced to its lowest point ever and 21.9% said it has reduced their profits “substantially”.


“That is, almost half of the self-employed population in Australia feel that Covid-19 has already had at least a substantial effect on their profits,” co-author Matthew Gray said.


Some 31.6% said their businesses would not be economically viable in the next two months if current economic trends continue, increasing to 40.1% if conditions continue for six months.


The treasurer, Josh Frydenberg, has warned the Covid-19 lockdown is costing the Australian economy $4bn a week. Some 600,000 Australians have already lost their jobs, with a 9.2% reduction in hours worked recorded in April.


On 8 May the national cabinet set out a three-stage path out of lockdown, to be decided by states at their own pace, which has already resulted in social distancing rules easing around Australia.


On Sunday, the Victorian government announced restaurants will be allowed to reopen with restrictions from 1 June, and the New South Wales premier, Gladys Berejiklian, urged other premiers to lift border restrictions to resume interstate tourism, trade and commerce.

The ANU study found that self-employed workers lost 9.3 hours per week on average, compared with 3.1 hours for employees.


Average income declined by $85 a week for employees and $87 for the self-employed, but when controlling for other factors the self-employed worker was $66.7 worse off than an otherwise identical employee.

Just 7.9% of the self-employed reported that Covid-19 had a positive effect on their profits and 10.3% reported no effect.

The ANU study found from February to April the proportion of the population reporting it was difficult to get by on their current income actually decreased from 26.7% to 22.8% due to an increase in government payments. But for the self-employed, the proportion who felt they could not get by increased from 29.3% to 36.1%.

Independent contractors and sole-traders are eligible for the $1,500 fortnightly jobkeeper wage subsidy, and at least 250,000 of the six million workers on the payments are sole traders.

The self-employed were almost three times as likely to have accessed retirement savings or superannuation early compared to employees, with 21.4% reporting doing so compared with 7.1% of employees.

“Clearly, self-employed Australians are really feeling the heat when it comes to the economic impact of Covid-19,” Gray said.

“Our survey shows this is also causing significant distress and taking a toll on their mental health.”

The ANU study concluded that without government payments including jobkeeper, “it is quite likely” outcomes would be “far worse”.

“However, as some of the physical distancing requirements begin to ease, and some businesses are able to reopen, it is very important that the objective and subjective outcomes of the self-employed continue to be monitored,” it said.


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Originally published: https://www.theguardian.com

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