Western Sydney more susceptible to ‘economic scarring’ post-lockdown, experts say

Western Sydney has emerged out of lockdown more susceptible to “economic scarring”, experts say, with new figures showing the region has the highest rates of unemployment in the city.

Three statistical districts in Sydney, the inner south-west, the south-west and Parramatta, make up nearly half the city’s job losses in October, with a majority of the Covid “LGAs of concern” located in those regions.

Those LGAs faced harsher restrictions than the rest of the city during the Delta outbreak, including having a curfew and travel limits if you were not an “authorised worker”.

In new figures released by the Australian Bureau of Statistics, the inner south-west, which includes the Canterbury-Bankstown LGA, had the highest unemployment rate in the city, at 8.8%, with unemployment among men in the region rising to 10.4% in October.

The south-west, which includes Fairfield, Cabramatta and Liverpool, saw unemployment rate rise to 8%, the second highest in the city. Parramatta had the third highest, at 7.9%, with unemployment in women rising to 10%.

By comparison, the unemployment rate for the entire city was at 5.7% in October.

The region represents some of the most diverse suburbs in the city, with a large percentage of residents having a parent born overseas or speaking a language other than English at home.

The region is also home to many jobs that would be impossible to do at home, including construction and hospitality roles. A report by Western Sydney Tafe from March showed the most in-demand jobs in the region included electricians, carpenters, kitchen hands and store-people, all jobs that were heavily affected by the lockdown.

Matt Grudnoff, senior economist at The Australia Institute, said the nature of jobs in the region left it open to “economic scarring”, whereby people who lose their jobs never return to the workforce.

“Unemployment creates what we call economic scarring, which means people become dis-attached from the labour market. If a business was expected to return and didn’t survive, or is now operating at a lower level and been badly impacted, then a lot of people won’t get their jobs back.

“And if you’ve been unemployed for a year or more, you technically become long-term unemployed. And, effectively, you find it a lot harder to get a job.

“Psychologically, it can be also be scarring for the individual to have lost their job, they lose their confidence, they lose their skills.”

Grudnoff said the concentration of unemployment in the region indicated the “scarring” had already begun, with social disadvantage creating a vicious cycle of precarious jobs and unemployment.

“We’ve seen massive growth in precarious work, and the problem with precarious workers is that the moment there is any kind of economic shock, such as a pandemic, they’re the first to lose their jobs.”

Western Sydney Leadership Dialogue’s executive director, Adam Leto, said it was “no surprise” to see unemployment rise in the region.

“There is no doubt that this year’s lockdown hit residents and businesses in western Sydney harder than other parts of the city.

“With such a large part of our economy concentrated on construction, manufacturing and small business, sectors that were particularly exposed during the pandemic, it’s no surprise to see unemployment figures rise.”

Leto added that the lockdown underscored the necessity of investment in the “liveability” of western Sydney. He said the unemployment figures reflected the inequality and “social disadvantage” in the region.

“In addition to its economic impact, the pandemic highlighted the social inequity that exists in the city and any recovery package needs to seriously look at opportunities that can not only stimulate economic activity, but also address social disadvantage.”

Although employment across the city fell by 215,000 during the Delta outbreak lockdown, between June and October, a majority of job losses came from the inner south-west and Parramatta, which lost 56,600 and 36,500 jobs respectively.


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