Coalition favours aged unemployed over youth

ScreenHunter_2200 Apr. 29 10.23

By Leith van Onselen

The AFR reported over the weekend that this week’s Federal Budget would include special incentive payments to employers that take on workers over the age of 50 who have been unemployed for six months or more:

…employers will be paid $250 a fortnight for six months if they take on somebody aged 50 or over who is unemployed… providing for a total payment of $3250 per employer…

The reluctance to employ mature workers is bordering on crisis. As of June 2013, there were 120,000 people aged over 50 who were out of work. The participation rate – which defines those either in work or looking for work – for people aged between 60 and 64 was 54 per cent. That is more than 10 percentage points lower than the national average of 65 per cent.

The budget measure will provide the incentive payments to employers who take on a mature-age worker who has been unemployed for six months or more and receiving the dole…

Discrimination against older workers is obviously a big issue and including such incentives in the Budget is a positive move.

That said, one wonders why older workers are being targeted for assistance when there is an equally large, if not greater, youth unemployment crisis?

As articulated by Business Spectator’s Callam Pickering last month:

The unemployment rate for 15 to 24 year olds has increased significantly since 2008, rising to around 12.5 per cent in February… Since 2008 the participation rate has declined by over 5 percentage points and it’s now at its lowest level since the series began in 1978. The rapid and sustained decline in youth participation since the global financial crisis is larger than during the early 1990s recession…

With the labour market for young Australians continuing to deteriorate, Australia is creating a generation of youth who will be less skilled and experienced than the generation that precedes it.

Further, as noted by former Treasury Secretary, Ken Henry, a few weeks back:

…average hours of work have been declining with an increase in part-time employment. In October 1992, one-third of those aged 15 to 24 who had a job worked part-time. Today, more than half of total employees aged 15 to 24 work part-time. Part-time work has also been increasing for those aged 25 to 64, but at a much slower rate.

That’s right, Australia’s youth unemployment rate has tripled since the Global Financial Crisis to 12.5%, causing 257,000 young Aussies between 15 to 24 years of age to be jobless. Of this number, 50,000 have been unemployed for more than 12 months, with the average length of time taken to gain a job rising to 29 weeks from only 16 weeks in 2008. More are also working part-time.

The below charts, from the Brotherhood of St Laurence’s latest report, On the Treadmill: Youth & Long-Term Unemployment in Australia, highlights dire the situation more clearly:

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ScreenHunter_2123 Apr. 17 14.43


With these facts in mind, it is curious that the Abbott Government does not intend to extend its incentive payments to the long-term unemployed more generally (including both young and old), rather than focusing on just one cohort – the baby boomer generation.

One also wonders why the Government is seeking to relax 457 visa rules so that employers can hire an unlimited number of foreign workers under a temporary working visa, potentially opening the system to widespread rorting and depriving locals – particularly the young and less-skilled – of employment opportunities.

Surely, a consistent approach would treat all unemployed equally.

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Unconventional Economist
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  1. We are fast approaching the point when the only sane, nondiscriminatory way to reduce unemployment is to cut the overtime point to 37 or even 36.5 hours.

    Eventually it will happen. Once all other options have failed.

  2. If I was employing the carrot of $3250 would be insignificant to me and I would still employ a young worker over a 55 Y/O every day of the week. Younger workers are cheaper. They are yet to be trained and therefore not set in their work habits.

    An older worker with skills will get contract work, that’s all. I know a senior lawyer who hasn’t been able to find a job in over two years despite thousands of job applications.

    • Younger workers are cheaper

      Well sounds like the problem is there.

      Oldies should make themselves cheaper.

      Start smaller, a little bit further out from the city, build up some workplace equity, and move to something a little more expensive

  3. Work for the pension scheme?
    I’d be happy to pay the aged the pension if they volunteer at the school canteen/reading programs, local vinnies store, ran programs at nursing homes, etc. Not exactly back breaking stuff.

      • Trading exerted labour for an income is slavery is it?

        Do you endorse obligation free income?

      • If the young ones can be forced to “work for the dole”, why can’t the oldies “work for the pension”?

      • drsmithyMEMBER

        Trading exerted labour for an income is slavery is it?

        Forcing someone to work for you under threat of starvation or other harm is pretty close.

        Do you endorse obligation free income?

        If there’s work to be done, then hire the people as actual employees to fulfill those tasks.

        If there isn’t work to be done, then we as a society are stepping in to make sure people don’t starve. If you want to make an argument against that position, please feel free.

      • drsmithyMEMBER

        If the young ones can be forced to “work for the dole”, why can’t the oldies “work for the pension”?

        Neither should have to.

        If there’s actual work, then there’s jobs. Employ people in those jobs.

        If there’s not work, and you think people should be forced to do some sort of busywork so as to justify society not allowing them to starve, then by all means make that argument.

  4. Old people have been around longer, that’s why they don’t vote Labor. The left wing fix for youth unemployment is to keep pushing up the minimum wage, so the young never get a start, and then turn into long term unemployed.

    • drsmithyMEMBER

      Because, obviously, when the employer doesn’t want to pay a worker some legislated pitiful amount, the problem must lie with the employee’s need to earn enough to live, rather than the employer’s greed and/or incompetency.

      I do wonder at which point it will dawn on the neoliberals, that once they’ve successfully minimised incomes, no-one will have any disposable income to buy things that aren’t essentials.

  5. Of course they do. How would you feel if you hit 24 and realised that the government was now going to work against you for the rest of your life, rather than gradually provide you wiht more and more support.

  6. The LNP are taking social and labour-market policy back to the 1920’s, bit-by-bit. Prior to the Curtin/Chifley “national insurance” settlement enacted at the end of WW2, support for the unemployed consisted of “sustenance” administered by the States and was available only to those who would or could undertake menial labour. Unemployment benefits for workers up to the age of 25 has been abolished, replaced by the very nominal “youth allowance” and available on restricted terms. Even if young workers become eligible to receive New Start, they will still have to subscribe to work-for-the-dole programs – effectively, agree to accept menial work at below-award rates in return for nominal sustenance.

    If, as is highly likely, the unemployment situation worsens, work-for-the dole schemes will almost certainly be extended by the LNP to the whole workforce.

    The LNP clearly wish to undo the whole post-war architecture. Practically their first act was to abolish ministerial responsibility for Science, a portfolio first created in the 1920’s. They have partially rolled back the mutual insurance safety net in the labour market. They are doing the same thing with medical insurance and access to services in public hospitals; and they clearly intend to unwind the provisions that have applied since 1910 in relation to aged and invalidity pensions.

    While there’s no doubt the fiscal position needs attention, chopping social incomes is neither necessary nor desirable in budgetary or economic terms, and really should be seen for what it is: ideological hatred.

    • You would get no argument from me that we need to turn the clock back when it comes to welfare. Surely it would be less soul destroying to have any job, than to sit on your arse at age 17, watching “The Young and Restless” with your Mum. Just the discipline of having to get out of bed and go somewhere might alleviate the hopelessness of unemployment. Just because some left wing dreamer says you should be worth forty grand a year in your first job, doesn’t make it so. Don’t you get it? The young must be given a start at any price and I am not saying that they stay on starvation wages forever, but If you don’t ever start working, that is exactly what should happen. There is nothing more important for society to make sure the young work and they know it from their first day at school.

      • ……and that way the proceeds from their labour will provide a nice dividend for anyone in the position to exploit them.

        Sure it is vitally important for kids to have jobs. For some kids it is important that they just have a job, for most it is important that they have a job where they learn something, and for the vast majority it is important that they have a job that is meaningful.

        While I have no doubt that Today Tonight or whatever current affairs show is about could rustle me up some incompetents who have trouble getting out of bed each day, most kids seem to learn the basics getting up and going to school.

        We need to turn the clock back when it comes to welfare do we? then lets ditch some of the proceeds awarded to pensioners (that their ancestors knew nowt about) –

        Market discipline is a two way street, and all that condescension ladled out for the young might be better value applied to those who have been spoon fed all their lives.

        The bigger issue on youth unemployment is making sure that there are meaningful jobs. All Australia is producing at the moment are part time retail gigs of no substance whatsoever.

  7. There is nothing more important for society to make sure the young work and they know it from their first day at school.

    Your view pre-supposes that full employment is automatic in the economy. We know this is just a false presumption. To give but one example, there has been almost no growth in labour demand (expressed as hours worked) for three years. On a per capita basis, the labour market has been shrinking. It’s most likely about to get a lot worse.

    Sure, workers should be work-tested. But the arrangements being put in place amount to the stigmatisation of the young unemployed as a matter of principle. This takes us back to the era before the Depression – to an era when poverty and deprivation were deliberately institutionalised. Australia is about to surrender its claim to be an advanced economy.

  8. A segment related to 457s who fly under the radar are the significant numbers of Working Holiday Visas. The WHVs (predominantly European) have increased dramatically while e.g. (predominantly Asian) international students have higher barriers to entry…. even though paying for the privilige…..

    WHVs need only show a modest level of funds, no qualifications, no labour market testing, and can work unlimited hours (think) for up to 6 months, and if they can show evidence of agricultural work they can get 2nd year extension.

    With economic stress that has existed in Europe past 7 years no surprise many Irish, British, Italians etc. etc. use the WHV as a bridging visa, i.e. trying to move onto a 457, or more permanent visa.

  9. I agree some would exploit the young [weren’t we all at some time] and you’ll get no argument from me about middle-class or age welfare either [for those that don’t need it] . But neither of these are as important as getting young people to do something worthwhile that is valued by society and themselves particularly. Giving money to teenagers never happened when I was young and I did some shitty work for not much, but it certainly focussed your mind on getting something better. Removing the promise of welfare from young thinking would be a positive step in my opinion, but welfare hasn’t improved society in the last forty years, it just fertilises the problem.

  10. Participation rate of older workers may also reflect workers being excluded from the workforce thru injury. Centrelink also excludes some people who have been saving for retirement outside of super.