Government right to target “job snobs”

Via The Australian:

Coalition MPs with thousands of dole recipients in their electorates have hit out at “job snobs” and demanded the government target those who are “working the system” by choosing welfare over work and leaving employers to rely on foreign labour.

Warning that employers, particularly in regional areas, are “competing with the welfare system” in the domestic labour market, backbench MPs are calling for this week’s abolition of the 457 visa program to be coupled with measures to toughen access to unemployment benefits.

Warren Entsch, who coined the term “job snobs” that was rejected by Malcolm Turnbull this week when he announced the axing of the 457 program, said the welfare system was working as a disincentive to work.

Many jobs in his north Queensland electorate were filled by foreign workers despite one in four young people in the ­regional centre of Cairns being without a job. “The problem that we have is we have got a very large cohort of younger people now who want to go to the top of the skillset as their first job,” Mr Entsch said.

I don’t mind this rhetoric at all. It’s a more than fair adjustment to the social contract to cut immigration while prompting those can take lower level jobs to do so. As Tim Colebatch put it last week:

The table below, contrasting the experiences of recent migrants and the Australian-born, highlights our predicament. By making it so easy for employers to hire their skilled workforce overseas rather than face the expense of training Australians, we have closed off opportunities for young Australians to move up the ladder and gain the skills and experience that will allow them a good future.

Our future depends on Australians developing the skills to maintain a high-income, technologically advanced country in an increasingly competitive world. We made a mistake in following the US model of importing skilled labour and leaving the young in the rustbelt to scrape by as best they can. There are many reasons why our migrant workers are not generating enough demand to replace the jobs they have taken: what is clear is that our current system is not working for those who were born and raised here.

As locals fill available positions a tighter labour market will result and wages begin to rise again.

However, there are some big problems with the Coalition approach. The first, of course, is that it has not cut immigration – the permanent migrant intake of 200,000 people is unchanged (most of which are work visas). The 457 visa shift is largely cosmetic, just as this “job snob” rhetoric probably will be given how badly the electorate took Abbott’s anti-welfare 2014 Budget.

The second is that cutting the dole almost never works. It’s already so low that anyone preferring it to a job is not going to change their mind now. It would be much better policy to aim to aid education and training for young people to match employers needs, as well as addressing the high effective marginal tax rates applying to those shifting from welfare to work.

We also shouldn’t lose sight of the fact that Australia’s welfare system as it pertains to the unemployed is already one of the most tightly means tested among the developed countries. It is also so horribly low – at just $268 a week for a single – that the Business Council of Australia claims Newstart “presents a barrier to employment and risks entrenching poverty”. Heck, even the Coalition-dominated inquiry into Newstart found there was a “compelling case” for boosting it, although it refrained from recommending so for budgetary reasons.

The Government’s own Budget figures also show that unemployment benefits make up a tiny fraction of the welfare Budget:

And unemployment benefits are actually forecast to decline as a percentage of GDP over the forward estimates:

Clearly, concerns about widespread rorting and waste regarding unemployment benefits seem overdone. While there may be some abuse at the margins (as is the case in all quarters of the tax and welfare system), the fact remains that unemployment benefits in Australia are already tightly means tested, payments are already ridiculously low, and the cost to the Budget is expected to decline relative to GDP.

Nevertheless, a new deal for youth that slashed immigration, encouraged worker participation and reformed away property tax giveaways, pushing house prices lower, would be a deal for youth well worth making.

But until real action to deliver the above happens this is just more Coalition fake government blowing a smokescreen for its immigration and property price obsession.