Extending JobKeeper would “distort” labour market

National COVID Commission chairman Nev Power contends that the JobKeeper wage subsidy scheme should end as scheduled in late March.

Power says retaining the scheme would risk distorting the labour market by encouraging employers to retain staff that they should lay off, who could then be redeployed to sectors that are experiencing a shortage of workers.

He adds that COVID-induced international border closures means access to migrant labour will be restricted for the next several years, therefore Australian workers will need to be retrained and upskilled to work in sectors where demand for staff is high.

From The Australian:

“The time has come for JobKeeper to end because of the risk of it distorting the labour market”…

“Those businesses which may ultimately need to reduce their workforce at still hanging onto them”…

“We need to release those workers to move to other areas where there is demand”…

“Labour demand is relatively high because our economy is performing pretty well and we don’t have the migrant workers, the seasonal workers and the holiday visa workers.”

MB has repeatedly noted similar concerns.

Because JobKeeper ties existing workers to existing firms, it prevents workers from gravitating towards sectors and firms where they will be more productively used.

In turn, JobKeeper prevents the economy from restructuring via the process of ‘creative destruction’ by supporting industries and firms that have no long-term future.

JobKeeper is also a convoluted program that benefited some businesses over others, can be gamed, and led to perverse outcomes, such as inflated company profits, dividends and bonuses.

Instead of extending JobKeeper beyond its end-March expiry date, the federal government should have instead lifted JobSeeker to the Aged Pension level.

JobSeeker is a non-distortionary social safety net that provides displaced workers with emergency income support without tying people to firms that have poor long-term prospects.

Accordingly, JobSeeker facilitates labour mobility by allowing workers to move around the economy to areas where they can be productively employed.

Most can agree that displaced workers require income support. However, they should not be supported in areas that would no longer survive without subsidies.

Unconventional Economist

Comments

  1. Cynical snake

    “JobKeeper prevents the economy from restructuring via the process of ‘creative destruction’ by supporting industries and firms that have no long-term future.”

    They only have no long term future if current restrictions are going to remain indefinitely.
    Remove jobkeeper when you remove the restrictions on businesses operating as normal pre pando.

  2. MathiasMEMBER

    Isnt an election coming up?

    Clearly there’s going to be lots of money printing going around. That moneys got to be thrust into the community somehow and in the Libs fashion, they’ll want it flowing into Real Estate somehow. They’ll want it tied to there Election Base coming up this year. My guess is these days are just them talking about how as a party, they can better target there voter base and win the next coming election again.

    Ha ha. I wonder if they’ll announce a huge spending spree on ” Anti-Rape Clinics around Australia ” ha ha. Maybe they can call it Rape-Remover or some stupid thing lol. Buy there problems away lol.

    Im surprised they arent heavily funding Vaccine Rollouts ( to speed up immigration into our empty Sydney/Melbourne cities ), JobKeeper and HouseBuilder.

    These morons are corrupt beyond belief. The concept that they’ll destroy Australia hasnt even entered into there precious little Ego’s.

    • kannigetMEMBER

      They will just rename their electoral offices “anti rape” zones and funnel government resources into improving the atmosphere so the staff are less likely to “feel” raped.