The COVID-19 shutdown has affected many customer-facing businesses; notably bricks and mortar retailers, and the food and hospitality sectors. Understanding how this impact varies across regions is particularly important given the inherent vulnerability of workers in these sectors.
Analysing the spatial distribution of workers in these sectors shows the hardest-hit areas are major cities and inner suburbs, regional areas that rely on tourism, including many regional areas already affected by recent summer bushfires. This analysis provides insight into how vulnerable workers in different parts of Australia are likely to be affected in the short and long term and aims to help the most affected councils plan their responses.
The purpose of my analysis is to understand the long-term effects the COVID-19 shutdown may have on some of Australia’s most vulnerable workers so that government decision makers can prioritise programs and support packages.
Occupations most likely affected
ABS Census Occupation data at the four-digit level shows a select group of occupations that are both particularly susceptible in the present crisis, and inherently vulnerable. These are occupations that:
- are customer-facing and linked to the sale of goods and/or services
- rely on a relatively unskilled, and uneducated workforce
- operate within heavily casualised sectors, and
- are relatively poorly paid.
People working in these sectors are likely to be directly and severely impacted by the closure of retail centres and the collapse of tourism. These workers are particularly vulnerable because - due to the nature of their employment, which is often part-time or casual - they are more likely to have been living week-to-week, with relatively low levels of savings.
Workers in many other sectors may become unemployed, their full-time employment status, relatively good wages and capacity to change career direction will leave them better placed to recover once the pandemic recedes. But workers who don’t have the education or skills base to facilitate a shift into an alternate occupation are likely to fall into structural unemployment.
For this analysis, 50 of the 474 occupation categories identified by the ABS were selected - categories most directly associated with providing retail, food and hospitality and tourism-related services. The analysis is based on the workers’ place of residence.
Vulnerable workers across each state
The spatial distribution of vulnerable workers in the retail, food and hospitality and tourism-related services sectors shows that the hardest-hit areas are major cities and inner suburbs, regional areas that rely on tourism, including many regional areas already affected by the 2019/2020 bushfires.
Explore the interactive map
In Victoria, inner-metropolitan populations are the most impacted; in particular, those in the local government areas of Melbourne, Yarra and Port Phillip.
The City of Melbourne is the business, recreational, education and tourism centre of Victoria, so it’s no surprise the food and hospitality, and retail sectors support a significant local workforce. A large portion of workers in the Yarra and Port Phillip local government areas are also employed in relatively vulnerable occupations.
In regional Victoria, the proportions of vulnerable workers in these sectors tend to be relatively low outside of the major regional centres, excepting tourism-reliant regions such as the High Country and parts of the Surf Coast Shire.
An important difference between large regional service centres, such as Ballarat, and more visitation-oriented economies, such as the Surf Coast, is that the first relies largely on expenditure drawn from the catchment population. In contrast, the second relies upon tourist expenditure. Economies with local population-driven expenditure are likely to recover faster than economies with expenditure linked to tourism.
New South Wales
Like Victoria, areas with the largest proportion of workers in vulnerable sectors reside in and around the central business district. The City of Sydney has the highest proportion of vulnerable workers, with Waverley and parts of the Inner West and Inner South home to large numbers of vulnerable workers.
For parts of regional New South Wales – where agriculture rather than tourism is dominant – the proportion of the workforce in vulnerable employment is relatively small. However, some regional centres and areas that attract tourists, including the Southern Highlands and the Snowy Mountains, will be impacted.
Parts of New South Wales where retail and hospitality businesses rely upon expenditure drawn from beyond the local area will recover slower – meaning more workers in these regions are likely to be out of work for longer. Central Sydney with its reliance on tourism, education, retail and hospitality expenditure, will be heavily impacted.
Outside of Sydney, the impact will be particularly severe in parts of New South Wales that not only rely on tourism but were also impacted by the 2019/20 bushfires.
In Adelaide, vulnerable workers are spread more evenly across the metropolitan area, with higher concentrations in Prospect, West Torrens, Campbelltown and Marion. This spread reflects the fact that retail and hospitality expenditure in Adelaide is more likely to be driven by local population than interstate and overseas visitation, highlighting the very different role of the retail and food and hospitality sectors in Adelaide’s economy compared to Melbourne and Sydney.
That said, international education is a major driver of expenditure in Adelaide, in particular, central Adelaide. With a significant share of the retail and hospitality offer in central Adelaide geared to servicing this expenditure, the impact of the shutdown will be felt deeply within the square mile.
South Australia's wine regions draw in a significant amount of expenditure from beyond their local population catchments, and the workforces of these regions - including the Barossa and Clare Valleys, McLaren Vale and the Coonawarra - will likely be severely impacted.
Elsewhere in regional South Australia, the tourism-reliant workforces of Kangaroo Island and Robe are particularly vulnerable, with the proportion of local workers in vulnerable sectors among the highest in Australia. For Kangaroo Island, the economic consequences are likely to be acute, as the community continues to grapple with the aftermath of the catastrophic summer bushfires.
Douglas in Far North Queensland is the most exposed local government area in Australia with 26.5 per cent of workers identified within vulnerable sectors.
With the Queensland economy broadly reliant on tourism, it comes as no surprise that constituent tourist regions such as the Gold Coast, Sunshine Coast, Whitsundays and Cairns are particularly vulnerable. With foreign and domestic tourist numbers likely to be slow to recover, these regions and their workforces face significant challenges in the aftermath of the crisis.
Western Australia contains some of the more vulnerable parts of Australia in terms of workforce. Looking first at metropolitan Perth, the City of Perth, and the inner-city local government areas of Victoria Park and Vincent are vulnerable with many retail and hospitality workers servicing city workers, tourist and visitors.
In the regions, the workforces of local government areas within important tourist regions are expected to be severely affected, including Margaret River, Shark Bay, Exmouth and Broome. When tourism returns in Australia, it will most likely be overwhelmingly domestic, and car-based which will favour tourist regions within a relatively short drive of the major population centres. Within Western Australia, this means that businesses servicing tourism areas such as Margaret River have relatively good prospects for recovery once tourist travel resumes. Recovery will be slower for regions distant from major centres that are reliant on visitors arriving by air.
In Tasmania, the regions with the highest share of vulnerable workers are in and around metropolitan Hobart, with the City of Hobart the most vulnerable. Other parts of the state with high proportions of vulnerable workers are city regions that serve regional catchment, i.e. Launceston and Burnie. Outside of Tasmania’s most populated areas, the east coast – with an economy heavily reliant on external visitation – has the most vulnerable workforce.
Tasmania’s relatively strong recent economic performance has been driven, in large part, by tourism. However, with tourist numbers not likely to return to pre-COVID levels for some time, many of the retail and hospitality jobs created to service tourism expenditure will not return in the aftermath of the crisis.
In Darwin, Palmerston and Alice Springs, a large share of workers are in vulnerable sectors and are likely to be impacted by the shutdown. With many businesses in these regions heavily dependent on tourist visitation, the absence of international tourists, and the likely severe downturn in domestic tourists willing to fly, means that many lost jobs in retail and hospitality are not likely to return soon.
Australia’s most vulnerable places
Workers in vulnerable sectors across Australia are being hit hard by the COVID-19 pandemic shutdown. The parts of Australia that are uniquely vulnerable are:
- Centres and inner suburbs of major cities: These regions attract large numbers of interstate and overseas tourists, international students, and large numbers of workers daily. People also tend to converge on central cities for recreation and events, with central regions often home to large-scale retail, restaurants and eateries, as well as being home to a large number of cultural, arts and sporting events.
- Regional areas that rely on tourism: Over recent decades, the decline of agricultural employment has decimated many regional areas. In others, employment in agriculture has been replaced by work associated with tourism and visitation, and many local economies are now heavily reliant on tourism.
- Regional areas hit by dual crises: Parts of regional Australia impacted by the COVID-19 shutdown and the catastrophic summer bushfires will experience significant economic loss. In particular, areas that are heavily reliant on tourism such as Kangaroo Island in South Australia and parts of Southern NSW and North-Eastern Victoria.
The ongoing role of local government
Federal and state government stimulus packages will help address many of the short-term impacts of the COVID-19 shutdown, but local governments could shoulder much of the longer-term responsibility. In the future, local governments are likely to experience:
- Loss of employment in vulnerable sectors and resulting support needed for retraining and adjustment.
- Increased demand for disability and other health services, with marginalised groups likely to be particularly hard hit by unemployment, and with mental health likely to become an increasingly salient issue.
- Increased demand for social and affordable housing, as high housing costs (particularly in inner-city areas) contribute to high rates of housing stress.
Local governments impacted by the 2019/2020 bushfires and the COVID-19 shutdown may see:
- The decline of many regions’ economic bases, with the closure of businesses leading to loss of employment and population.
- An emerging entrepreneurial role for local government’s seeking to stimulate local economies by attracting new businesses and growing new sectors.
- The weakening of local economies will threaten the financial sustainability of many local governments, as well as the towns and regions they support.
While most of Australia’s economy has been affected by the COVID-19 shutdown, the hardest hit sector, in the first instance, was customer-facing businesses in the retail and hospitality sectors. Understanding how this impact varies across regions is particularly important given the inherent vulnerability of workers in these sectors. This analysis provides insight into how vulnerable workers in different parts of Australia are likely to be affected in the short and long term and aims to help the most affected councils plan their responses.