The Abbott Government has backed away from its draconian plan to require unemployed jobseekers to apply for 40 jobs a month in order to receive the dole, admitting the plan would have created a “meaningless” burden on employers that would have had to sift through piles of sham job applications. From The AFR:
“It is clear that, overwhelmingly, people say that if you’re unemployed, your full-time job should be job seeking,” he said.
“On the other side, there is the view – and I think it’s a legitimate view – that getting people to apply for 40 jobs in a meaningless way will achieve no purpose and, what’s more, be a real burden to small businesses especially in regional areas.
“So, we are factoring in all that community feedback.”
This is a great move and hopefully signals that the Abbott Government is prepared to abandon ideology in favour of evidence and practicality.
The fact remains that there is a large pool of unemployed not because job seekers are lazy, but because the labour market is too weak and demand from employers is low.
As a next step, the Coalition should abandon its cruel plan to delay paying under-30s unemployment benefits for six months. As noted, previously, Australia is facing a budding youth jobs crisis, with unemployment for 15-24 year-olds at nearly 14% and rising fast, and the number of jobs for this age group declining by 6% since the GFC (see below chart and table).
Over at Dad’s Army, Robert Gottliebsen (“Gotti”) has produced what he believes is the solution to Australia’s youth unemployment crisis:
Today I am going to tackle the hardest problem in Australia and indeed around the globe: high youth unemployment. In an attempt to show how we can reduce it, I spoke with Andrew Bassat, chief executive of Seek in his KGB interview, several downmarket café owners recruiting in the low-skilled youth end of the job chain and draw on remarkable research published in the New York Times.
…Economists Stephen J. Davis of the University of Chicago and John Haltiwanger of the University of Maryland have discovered that when there is a lack of churn in the labour market (the rate at which people change jobs), it makes it harder for younger people to find jobs. And when they don’t find jobs, they are more likely to remain outside the labour force.
…Bassat says part of the problem is that Australia’s leading companies are being driven to short-term thinking by yield-chasing institutions. The chief executives of our big companies are not willing to take risks and look for growth.
…Australia has a set of shift allowances and penalty rates that many small cafes cannot and do not pay. Recent changes will help but they don’t solve the problem. The café owner is looking for a person who really wants a job, will get on well with other employees and the owner, and will be ‘flexible’ in nominating the days they works for taxable income.
Increasing churn in the labour market will do absolutely nothing to increase the overall number of jobs. Excessive churn is also wasteful, lowering labour productivity (e.g. the time wasted in training new staff) and raising firm’s recruitment and administrative costs.
The point about business short-termism is broadly valid, but how does Gotti propose that policy makers change this? They are (mostly) private companies after all.
His final point about allowances and penalty rates is really just code for lowering workers’ pay and conditions. I suspect few Australians would like to see Australia become like the United States, whose minimum wage is amongst the lowest in the world and where the percentage of low paid workers (i.e. earning less than two-thirds median incomes) is the highest in the OECD (25.1% versus 16.1% as a whole for the OECD).
As noted by the Guardian’s Greg Jericho:
A US family on median income in 2012 actually earned less than it did in 1989, while its middle class as a whole has shrunk. That’s a hell of situation to think it is worth aiming for.
Perhaps if the Government cut back on dubious 457 visas, and instead invested in greater education and training, then unemployed youth would have more employment options?
More broadly, with the mining investment boom still to unwind and the local car assembly industry set to shutter by 2017, the situation facing the unemployed is only likely to worsen. This means that now is definitely not the time for the Government to be introducing draconian measures against some of the most vulnerable members of society, who have found themselves thrown on the scrap heap through no fault of their own.
