The Turnbull Government’s Youth-Jobs PaTH program, which was announced in last year’s Federal Budget, has been green-lit by the Coalition despite being blocked in the Senate. From The Guardian:
The Turnbull government launched its Prepare, Train and Hire (PaTH) internship program on Monday despite the legislation for its full implementation being stuck in the Senate.
Implementing the internships without legislation could cost workers up to $42 a fortnight, because the $200 a fortnight they receive for taking on work placements will count as income that reduces their other social security payments.
The Coalition has urged Labor, the Greens and One Nation to pass the PaTH bill but says the program will stand on its merits even if the bill is blocked.
Under the PaTH scheme, first announced in the 2016 budget, the government will pay businesses $1,000 to take on young, unemployed people as interns for up to 12 weeks. The young jobseekers working as interns would receive $200 on top of their fortnightly welfare payments.
Businesses that employ people full-time at the end of their internships will be eligible for a youth bonus wage subsidy of between $6,500 and $10,000.
The scheme is opposed by Labor, the Greens and unions, who fear employers will use it to churn through free workers rather than creating real jobs…
We noted similar concerns to Labor and The Greens when PaTH was initially announced. That is, while the Youth Jobs PaTH program may help at the margins, it won’t do much to increase the overall supply of youth jobs and could also lead to employers substituting a regular employee for an intern, saving themselves money in the process.
Consider PaTH from an employers perspective. They will get a free kick as the Government is not only the one paying the intern, but the employer also receives $1,000 up front for employing the intern without the need to worry about sick days, annual leave or penalty rates.
Why would an employer hire a young worker on a casual basis when they can effectively get paid to take on an intern? Indeed, the evidence on these types of programs shows that employers will generally substitute a worker receiving a wage subsidy for another worker who would otherwise have been hired.
Ultimately, the youth labour market tracks overall employment, and unfortunately the situation here is dire. Youth unemployment is running at 13% with substantial hidden unemployment also present owing to the mammoth fall in the participation rate:
Youth employment has also been falling for most of the time since the Global Financial Crisis, with total employment down 5% since September 2008 despite the 7% rise in the population aged 15 to 24 years old:
When viewed in this light, the Youth Jobs PaTH program is really just tinkering at the edges of the youth employment dilemma, and not necessarily in a positive way.
