6 May 2020

Covid-19: Job losses in Auckland could be three times worse than GFC - report

7:45 pm on 6 May 2020

A new economic report is forecasting that three times as many jobs could be lost in central Auckland by next March than during the Global Financial Crisis, with GDP also expected to take a huge hit.

Auckland City's marina during the Covid-19 alert level four lockdown.

Auckland City's marina during the Covid-19 alert level four lockdown. Photo: RNZ / Patrice Allen

The central Auckland business association Heart of the City commissioned the report, which found that it'll take at least two years for the city to get back to pre-Covid levels.

Anne Mazer, who owns knitwear shops Great Kiwi Yarns and the Country Collection on lower Queen St, is still having to find rent despite having next to nothing moving through the tills.

"We are fighting on every detail to be able to survive. If nothing is done we are going to lose everything - we are to lose our business but if we lose our business we also lose housing. So it's much, much worse than they seem to understand."

Mazer's shops rely heavily on tourists arriving at the nearby cruise ship terminal and those exploring the CBD.

She has been doing some business online but earning next to nothing compared with when the shops are open.

The length of time it was taking couriers to deliver items meant she was having to take matters into her own hands, she said.

"Just talking in New Zealand, it takes weeks before they get the parcel. It's about the whole image that the customer has and it's not good when they call you and say, 'Where is my parcel?'," she said.

"So if it's in Auckland I'm driving there myself to make sure they have it in one day."

But she is not alone.

The report by economists Strateg.Ease forecasts that more than 12,400 jobs and $3.1 billion of GDP could be lost by March next year in central Auckland alone.

Auckland's deserted viaduct area during the Covid-19 alert level four lockdown.

Auckland's deserted viaduct area during the Covid-19 alert level 4 lockdown. Photo: RNZ / Dan Cook

Heart of the City chief executive Viv Beck said the projected job losses were almost three times as bad as in the Global Financial Crisis.

"What we've got is a much more broad-based impact [across] multiple sectors, a drop in tourism, a drop in international students. Large scale events that are a big attractor into the city centre, can't do them."

The report looks at likely impacts of a relatively quick easing of lockdown restrictions and a scenario where they're in place for longer, compared with a baseline of pre-Covid growth rates.

Even if the country emerges from alert level 3 relatively quickly, the report finds it will be at least two years to get back to where we were before the pandemic.

It found that coming out of the full lockdown didn't actually change much for many of the city's businesses, because the ones that could work remotely were doing so during level 4, and many of those that couldn't trade still can't do businesses during level 3.

An empty Queen St in Auckland the morning after a Level 4 Covid-19 lockdown was announced.

An empty Queen St in Auckland the morning after a level 4 lockdown was announced. Photo: RNZ / Jordan bond

Beck said the report highlighted the urgency of moving down the alert levels.

"This [lockdown] is incredibly restrictive. People understand the importance of the safety parameters but we've really got to enable businesses to trade as long as they can do so safely," she said.

"Cashflow is incredibly important: it's unrealistic to expect businesses to shoulder the impacts of Covid without support with cashflow."

She said commercial rent was a concern that arises time and time again.

Mayor Phil Goff has been hearing from numerous economists about the outlook for the city, and the numbers were not looking good.

"The general feeling is that we are going to see unemployment that could hit anywhere between 9 and 12 percent, probably peaking at that level later this year," he said.

"That's not simply the heart of the city, although that's hit disproportionately because of its reliance on tourists and international students."

One small sliver of hope for Anne Mazer and other CBD businesses is next year's America's Cup, which Goff said probably could go ahead, albeit with far fewer benefits arising from the usual influx of tourists and super yachts.

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