Last week I ripped apart the latest iteration of the Turnbull Government’s $750 million Youth-Jobs PaTH program – to prepare, trial and ultimately hire young Australians – after it was revealed that the Australian Hotels Association has agreed to take 10,000 internships over the next four years:
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. Then if the intern is offered a job, the employer receives another payment of $6500 or $10,000 from taxpayers!
Why would an employer hire a young worker on a casual basis when they can effectively get paid to take on an intern?
Osman Faruqi then penned a scathing rebuke in BuzzFeed, noting that “the government will be paying young people as little $4 an hour to pull beers… [and]… will also give every pub that signs up $1,000 for every intern they take on”,.. basically handing over 10,000 free workers to the hospitality industry”.
Over the weekend, The Guardian’s Greg Jericho entered the fold, claiming the PaTH policy is “among the stupidest ever seen in Australian politics”:
This is the program that involves unemployed people under the age of 25 getting an extra $200 a fortnight for doing an internship for four to 12 weeks of between 15-25 hours a week. The employer of this intern gets $1,000, and does not actually pay the intern. If, after the internship they do then employ them, they get a wage subsidy of up to $10,000 (depending on certain conditions).
It’s a sweet deal.
But common sense tells you it is not an employment policy, but an industry subsidy with a nice bonus of bashing people on welfare as slackers.
If an intern does 50 hours a fortnight work she or he gets just an extra $4 an hour – hardly the greatest of all incentives. And given the minimum wage is $18.29 an hour, and the current Newstart for a single person is $535.60 a fortnight, if any of these interns work more than 40 hours in the fortnight they will be on a rate below minimum wage…Now common sense might have you think that for these internships to be of any worth they would be in jobs that young people would normally struggle to get, right?
Sorry, nope.
This week, Cash proudly announced a hoped-for increase of 10,000 path internships with the Australian Hotels Association.
The accommodation and food industry into which these 10,000 internships will go employs young workers. Under-25s account for 15% of all people employed in Australia, but they account for 45% of all workers in the accommodation and food services industry. More than one-fifth of all workers under the age of 25 work in that industry (21%) compared with 5% of workers over the age of 25.It is also the lowest-paying industry. The average earnings for workers in the industry is just $524 a week compared to the national average of $1,163. It also has the highest level of underemployment of any industry. In May, 20% of workers in the industry were underemployed compared to the national average of 9.1%.
Common sense tells you that when you have an industry that pays less than others, employs more young people than others, and has a much higher level of underemployment than others, it is not really in need of policy that will have 10,000 young people working for less than the minimum wage and for which the employer will not only not have to pay them, but will be given $1,000 from the government…
Work for the dole schemes wherever they have been tried have not actually produced any real results other than a warm fuzzy feeling from those who believe that “the best form of welfare is a job”…
Very well said. The evidence on these types of programs does indeed show that employers will generally substitute a worker receiving a wage subsidy for another worker who would otherwise have been hired.
Thus, PaTH is unlikely to generate extra employment and merely represents a free gift to corporate Australia courtesy of the taxpayer.
