Meet the Liveable Income Guarantee: a budget-ready proposal that would prevent unemployment benefits falling off a cliff



Ben Jeayes/Shutterstock

John Quiggin, The University of Queensland; Elise Klein, Australian National University, and Troy Henderson, University of Sydney

The economic crises that have punctuated the 21st century, most notably the global financial crisis and the COVID-19 crisis, have led to a growing realisation that alternatives to our present system are possible and perhaps inevitable.

In particular, there has been an erosion of the belief that the economy is able to provide a decent income to everyone who wants to work.

A number of proposals have been put forward in the wake of this realisation, among them

  • universal basic income, which would unconditionally provide every resident (children and adults) with a regular subsistence wage

  • a job guarantee in which the government would provide real jobs, at the minimum wage, to all unemployed Australians

Many seem utopian, which isn’t necessarily a bad thing – it’s good to look beyond the day-to-day to consider how things could be done differently.

In a new Australian National University Policy Brief we propose something practical, which we are calling a Liveable Income Guarantee (LIG).

Take the age pension..

It starts with one of the most successful institutions we’ve got: the age pension.

Before the age pension was introduced in 1908, retired Australians were highly likely to be poor. But now, on some measures, retired Australians are less likely to be in poverty than Australians of less than pension age.

Our proposal is to replicate this success for the entire population.

We are proposing a payment equal to the pension, and subject to the same asset and income tests, that would be provided to everyone who is willing to make a contribution to society consistent with their ability to do so.

…extend it to others

“Contribution” would be defined broadly to maximise contributions. Examples would include full-time study, volunteering, caring for children, ecological care, and starting a small business.

The biggest shift relates to the treatment of unemployed workers and single parents.

JobSeeker is set to return to the unliveable rates of the former Newstart after the end of December.

We are suggesting that instead it be lifted to the rate of the age pension, which is about where it used to be before unemployment benefits were frozen in real terms in the 1990s.


Newstart versus the age pension

Dollars per fortnight, single.
Source: Ben Phillips ANU, DSS

Parenting Payments have also been notoriously low, especially for single parents, whose support has been cut consecutively by five prime ministers from Howard to Turnbull.

Unlike some proposals for a universal payment to all citizens, the increased expenditure required for the liveable income guarantee would be relatively modest, as little as A$20 billion a year.

Do it for the price of tax cuts…

This is roughly comparable to the budget cost of the income tax cuts, primarily directed to high earners, legislated to take effect in 2022 and 2024.

The real barriers to the adoption of the proposal are ideological. The central assumption underlying economic policy in Australia has been that in a market economy everyone who wants a decent job is capable getting one.

It has followed that the unemployed are seen as either unwilling to work or suffering from particular deficits that need to be remedied by training and job readiness programs case by case.




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Over the first two decades of this century, it has become evident this assumption is incorrect. The global financial crisis and the subsequent swing to austerity produced sustained high unemployment in much of the developed world.

While Australia avoided the worst consequences thanks to well-timed stimulus (here and in China) the unemployment rate has failed to fall below 5% as underemployment has climbed for more than a decade.

Any prospect of a rapid return to full employment have been dashed by the pandemic.




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Longer term it is clear that many existing jobs will disappear as a result of technological change, and it isn’t clear that our current institutions will be able to manage the process.

While governments should commit to a return to full employment, they are unlikely to be completely successful.

Ready us for the future

The implementation of a liveable income guarantee would allow us to be better prepared in case they are not and to be better prepared for future disruptions, be they pandemics or anything else.

On the brighter side, technological progress has increased our productive capacity to the point where we can afford to support a much wider range of non-market contributions to a market economy. The crisis has shown us how important many of those contributions are.

Looking beyond the crisis, it is possible (relatively simple) to create a society in which everyone has a decent standard of living, and no one is excluded.

Providing dignity to everyone who makes a contribution would benefit us all.The Conversation

John Quiggin, Professor, School of Economics, The University of Queensland; Elise Klein, Senior Lecturer, Australian National University, and Troy Henderson, Lecturer in Political Economy, University of Sydney, University of Sydney

This article is republished from The Conversation under a Creative Commons license. Read the original article.

‘If JobSeeker was cut, the unemployed would be picking fruit’? Why that’s not true



F Armstrong Photography/Shutterstock

Peter Davidson, UNSW

I’m not sure which does the most harm: the cut of A$150 per week in JobSeeker payments due this Friday or the sudden and coincidental volley of media reports about unemployed people refusing jobs, including fruit picking.

This narrative is jarring when there are 19 people unemployed or underemployed for every vacancy and only 3% of employers report that they are recruiting but can’t find enough applicants.

Are unemployment payments really that cosy since they almost doubled in April from $282.85 to $557.85 a week?

$557.85 a week for a single adult is around 80% of the full-time minimum after-tax wage of $669 per week, and a good less again as a proportion of what most entry level jobs pay, because most pay more than the minimum wage.

Five studies conducted in the United States where unemployment payments were lifted US$600 per week during the coronavirus crisis found no evidence they were discouraging people from finding jobs.

Some were making 70% more than they did while in jobs.

Unemployed workers would generally prefer to be in paid work, and in any event are usually required to search for it.

There are other reasons not to pick fruit…

Fruit pickers are often underpaid cash-in-hand.

Growers representatives have told a parliamentary inquiry that when JobSeeker payments were doubled, many workers collected their final cheques and went home.

But temporary migrants and young locals are often underpaid in such jobs.

Squeezed by powerful customers, employers with thin margins and a ready supply of labour have grown used to offering very low wages cash-in-hand.

In piece-work like picking where pay is tied to output, there’s no legal requirement to pay minimum wages.

A labour hire firm recently complained people weren’t taking up their offer of “at least $500 per week” to pick strawberries.

$500 is two-thirds of the minimum wage.

It’s not just the pay that discourages people from taking up crop picking: they need to be fit and able to travel for what’s often a short period of paid work.

This won’t work for many people on Jobseeker, including the quarter with disabilities, the third aged 45 or over, and the 10% caring for children.




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Unemployment support will be slashed by $300 this week. This won’t help people find work


There are ways to reduce under-payment and high turnover in such jobs.

Reducing our reliance on temporary migrants would be a first step.

Otherwise, employers won’t compete fairly to attract workers, and local workers will remain wary.

More direct contact between the employers and unemployed people and less reliance on labour hire firms would help build trust.

…and other reasons not to work more days

Jobseeker tops up the wages of many part-time workers.

It is cut by 50c for every dollar earned above $53 per week, then 60c for every extra dollar earned up to $128 per week, before cutting out completely for a single adult on $544 per week.

Former social security official David Plunkett calculates that before COVID and the effective doubling of JobSeeker, a worker on it gained a net $100 to $200 for working one to three days a week at the minimum wage, climbing to $269 for the fourth day, after which Jobseeker expired.

Since the new arrangements and top up that effectively doubled JobSeeker, the net gains have fallen slightly $100 to $175 for the first three days, before dropping to just $5 on the fourth.




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The compromise that might just boost the JobSeeker unemployment benefit


The problem isn’t the effective doubling of JobSeeker, it’s the sudden-death cut off of the top-up as soon as the last dollar of Jobseeker expires.

That flaw could be fixed by tapering the supplement out gradually (rather than increasing the “income free area” to $150 per week as the government is proposing).

There’s no need to force people to choose between poverty and entry-level jobs.

Even if, for example, Jobseeker was increased permanently to the pension rate, it would still be under 70% of the minimum wage after tax.

Incentives for part-time work can be fixed by reforming income tests and tax. Beyond that, the answer to periodic labour shortages, exploitation and high turnover in entry-level jobs is better entry-level jobs.The Conversation

Peter Davidson, Adjunct Senior Lecturer, UNSW

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Keating is right. The Reserve Bank should do more. It needs to aim for more inflation



Ashwin/Shutterstock

Chris Edmond, University of Melbourne and Bruce Preston, University of Melbourne

Former prime minister Paul Keating isn’t alone in wanting the Reserve Bank to do much more to ensure economic recovery.

In an opinion piece for major newspapers he has said it ought to be directly funding government spending rather than indirectly by buying government bonds from third parties.

But we think there’s something else the Reserve Bank can do.

Governor Philip Lowe is right to call on governments to spend more, creating “fiscal stimulus”.

But we don’t think that absolves the Reserve Bank of the need to provide more “monetary stimulus”.

Simply put, the Reserve Bank needs to create more inflation. Quite a lot more.

For years now, the bank has chronically undershot its inflation target of 2% to 3% per year. This has to stop.


Consumer price inflation since the Reserve Bank’s 2-3% target


ABS Consumer Price Index, Australia

Inflation plays a vital role in government finances, through its influence on nominal income growth. Higher nominal income growth lowers outstanding debt as a fraction of income.

To appreciate the size of the effect, if average inflation runs at 1.5% per year rather than 2.5% per year (the bank’s central target), after a decade prices will be roughly 10% lower.




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As a consequence, public debt as a fraction of national income will be 10% higher, and that’s before taking into account the revenue implications of lower inflation.

Too much inflation creates its own problems, but so does too little.

Of course, the Reserve Bank’s options are limited right now. Short term interest rates are effectively zero and can’t go much lower without turning negative, an idea the bank has so far resisted.

The bank needs to commit to “too much” inflation

But there are things the bank can do, and they involve making clear its plans for when inflation recovers.

When economic growth revives, be it in 12 or 24 months, the bank will face a choice between raising rates to more normal levels, or continuing to keep them extraordinarily low.

The RBA should do the latter and promise serious inflation, more than it is comfortable with, for some time to come.




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Promising to overshoot its target band will raise inflation expectations and then inflation itself, lowering the real interest rate.

This will buttress the recovery, supporting economic growth. It will also greatly improve the state of government finances.

How much inflation should the RBA generate?

It should aim for average inflation of 2-3% over a long window, at least ten years.

This will place a clear upper bound on how much inflation is appropriate over the long term, while requiring substantial inflation for some time to make up for the sustained undershooting of its target.

It’s being tried in the United States

Such a policy might sound unusual. And there would be protests about credibility and the risks of changing institutional arrangements during a crisis.

But the United States Federal Reserve recently adopted such a policy after an extensive review.

There’s no reason Australia’s Reserve Bank couldn’t do the same.

As it happens, hardly any formal change is required. Its Statement on the Conduct of Monetary Policy says its goal is 2 to 3% inflation “on average, over time.”

So there’s no need to change the wording, merely the interpretation.

It could make clear that a practical change had taken place by referring to the new regime as a “price-level target”, since targeting inflation over a long time is equivalent to targeting a path for the overall level of prices.

It’d hold the bank to account

Regardless of the label, such a clearly enunciated approach would make monetary policy more effective and help the government with its finances.

And that’s not all. An average inflation target would provide a clearer benchmark against which to assess the bank’s performance and thus strengthen the accountability of one of our most important institutions.

Too often in the past the bank has excused its failure to hit its inflation target by appeals to a vague and shifting list of factors outside of its control.




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While some excuses may have merit, the existing regime does not well communicate how such undershooting determines what the bank will do in the future.

By contrast, an average inflation target would clearly communicate that whatever the excuses for undershooting, future policy will be set to overshoot until average inflation is back on target.

It’s appropriate for fiscal policy to take the lead right now. But monetary policy has to be ready to do its job too.The Conversation

Chris Edmond, Professor of Economics, University of Melbourne and Bruce Preston, Professor of Economics, University of Melbourne

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Reserve Bank ‘dallies with indolence’ instead of helping government pursue full employment: Paul Keating


Michelle Grattan, University of Canberra

Former prime minister Paul Keating has launched an extraordinary attack on the Reserve Bank, accusing it of having “one of its dalliances with indolence”, and describing it as “the Reverse Bank”.

Keating, who was treasurer in the Hawke government and once boasted of having the Reserve Bank in his pocket, said the bank’s job was “to help the government meet the task of full employment” and it was failing in this.

He criticised its officials for being “the high priests” of incrementalism, rather than doing what the situation called for.

His outburst, in a statement issued on Wednesday, followed a speech this week by the bank’s deputy governor Guy Debelle who canvassed the pros and cons of options for further monetary policy action if the bank’s board decided it was needed.

These included buying bonds further out along the curve, foreign exchange intervention, lowering rates without going into negative territory, and moving to negative rates.

Keating labelled Debelle’s contribution “meandering thoughts”.

“Knowing full well that monetary policy can now no longer add to nominal demand – something that now, only fiscal policy is capable of doing, the Reserve Bank is way behind the curve in supporting the government in its budgetary funding measures,” Keating said.

“For a moment, it showed some unlikely form in pursuing its 0.25% bond yield target for three year Treasury bonds and a low interest facility for banks.

“But now, after 600,000 superannuation accounts were cleared and closed down, with 500,000 of those belonging to people under 35 – a withdrawal of $35 billion in personal savings, and further demands arising from the employment hiatus in Victoria, [Debelle] yesterday strolled out with debating points about what further RBA action might be contemplated.”

Keating said that in his office when he was treasurer, the bank was nicknamed “the Reverse Bank”, because it was too slow raising rates in the late 1980s and too slow lowering them in the early 1990s – which gave Australia “a recession deeper than it would have otherwise had”.

As treasurer he’d “worn the cost of the bank’s indolence in the task of smashing inflation”. And as a measure of his giving the bank more discretion, as prime minister he’d worn the “great political cost” of the bank’s rate rises in 1994.

“As history has shown, when a real crisis is upon us the RBA is invariably late to the party. And so it is again,” Keating said.

The bank’s act had two objectives – price stability (not a problem at the moment) and full employment, Keating said.

“The Act says the Bank and the government should endeavour to agree on policies which meet that objective – in this case, employment.”

The bank “should be explicitly supporting the government so the country does not experience a massive fall in employment”, hitting particularly younger workers.

But instead of that, Debelle “conducts a guessing competition on what incremental step the Bank might take to help,” Keating said.

“These are the high priests of the incremental. Making absolutely certain that not a bank toe will be put across the line of central bank orthodoxy.

“Certainly not buying bonds directly from the Treasury – wash your mouth out on that one – what would they say about us at the annual BIS meeting in Basel?

“Not even ambitiously buying sufficient bonds in the secondary market, like the European Central Bank or the Bank of Japan.”

He said the bank should “shoulder the load. And in a super-low inflationary world, that load is funding fiscal policy. Mountainous sums of it.

“In an economic emergency of the current dimension that means putting the orthodoxy into perspective and doing what is sensibly required.”

Like other central banks, the Reserve Bank “has become a sort of deity, where lesser mortals might inquire, however respectfully, what the exalted priests might be thinking or have in mind for their prosperity or the country at large,” Keating said.

“The Governor and his deputies do not wear clerical collars and black suits. But that is the only difference in their comport and attitude.”The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Unemployment support will be slashed by $300 this week. This won’t help people find work



Stefan Postles/AAP

Bruce Bradbury, UNSW and Peter Whiteford, Crawford School of Public Policy, Australian National University

This week, support to unemployed Australians will be dramatically reduced.

In April, the new Coronavirus Supplement roughly doubled the level of benefits for unemployed people on the JobSeeker payment and a range of other working-age payments.

The supplement will drop from $550 to $250 a fortnight from Friday. This is before it is dropped entirely at the end of 2020.

While there has been increasing pressure from welfare groups to maintain a higher level of JobSeeker supplement, there have also been calls from within the government to remove extra supports, amid claims people are not looking for work.

Prime Minister Scott Morrison has warned about increased unemployment payments. As he said in June,

what we have to be worried about now is that we can’t allow the JobSeeker payment to become an impediment to people going out and doing work, getting extra shifts.

But will cutting support to unemployed Australians really help them get a job?

Our analysis shows there is considerable scope to increase JobSeeker payments before they might hinder people’s motivation to find paid work.

Lack of job searching is not the problem

Right now, there is little evidence a lack of job search effort is a significant problem for the economy.

Around 6.8% of the workforce is looking for work. But in July, Treasurer Josh Frydenberg acknowledged the real unemployment rate was closer to 13.3%, when “discouraged jobseekers” — not actively looking for work because their business is locked down or on hold — are included.

Treasurer Josh Frydenberg speaking at a press conference.
Treasurer Josh Frydenberg has noted the real unemployment rate is more than 13%.
Daniel Pockett/AAP

With about 1.6 million people on JobSeeker but only 130,000 job vacancies in May 2020, it matters little if some job seekers are more selective about the job offers they accept.

In fact, for the longer term health of the economy, it is important people find jobs that suit their skills. International evidence shows the provision of unemployment benefits slightly increase both the wages received when work is found and the stability (or duration) of the new job.

But would higher benefits be a problem as the economy recovers?

If benefits start to approach the level of minimum wages, some workers with low earning potential might decide the extra effort is not worth it — and so reduce their job search effort.

As the economy recovers, this will mean some potential jobs will go unfilled and government expenditure on JobSeeker will remain unnecessarily high.

Comparing JobSeeker to the minimum wage

However, our analysis shows Australia is in no danger of creating a disincentive for people to seek work because of higher JobSeeker payments.

We have compared Newstart and JobSeeker payments for single people with the minimum adult full-time wage (after tax) over the past three decades. This is a standard benchmark for assessing incentives to move from welfare benefits into work — assuming work is available.



Our analysis also looks at the payments provided to single pensioners. Pensioners received around 55% of the minimum wage up until 2009, when the pension was increased under the Rudd government. After that, net pension income was around 65% of the minimum wage. This is close to the commonly used poverty line, set at half the median household disposable income.

But for unemployed people on JobSeeker (or its predecessor, Newstart), the past two decades have seen a steady decline in their position relative to the minimum wage. It has fallen from around 50% in the 1990s to under 40% at the start of 2020 — well below the poverty line.

These calculations changed with the introduction of the Coronavirus Supplement in April, which almost doubled the payment for single unemployed people. Nonetheless, JobSeeker plus the supplement was still well below the adult minimum wage (76%, or 82% if we add shared accommodation rent assistance).




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On September 25, the Coronavirus Supplement will drop by $300 a fortnight. And the combined JobSeeker/supplement payment will fall back to 55% of the minimum wage until December 31.

Unless the federal government makes further changes, the supplement will be removed entirely at the end of the year. So those on JobSeeker will be back receiving less than 40% of the minimum wage.

The crisis isn’t over, why is support being wound back?

Neither the pandemic nor the economic crisis will be over by the end of 2020.

As the wage subsidy program JobKeeper is also wound back, next week and then again, next year, increasing numbers will become reliant upon JobSeeker.

Man wearing mask lines up outside Centrelink office.
The Australian economy could take years to recover from COVID-19.
Dan Peled/AAP

If the payment reductions continue as forecast, this will force many people well below the poverty line. A recent Australian National University analysis estimated an extra 740,000 people will be pushed into poverty.

This would not only be a disaster for the people directly affected, but also likely have large adverse economic effects. Deloitte Access Economics estimates withdrawing the Coronavirus Supplement support would be equal to a reduction in the size of the economy of $31.3 billion and an average loss of 145,000 full-time equivalent jobs.

The case to maintain much of the crisis-induced increase in payments is clear. In the short term, there will be no shortage of people looking for work. Maintaining payments at around the pension level — close to the poverty line — should be our policy objective.




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Even in the longer term, as labour demand increases, the large gap between welfare payments and minimum wages leaves plenty of room for permanent increases in income support, without creating a disincentive for people to look for work.

At a minimum, permanently increasing JobSeeker to 50% of the minimum wage — as was the case in the 1990s — should be an easily achievable target for Australia as it makes it way through the economic wreckage of COVID-19.The Conversation

Bruce Bradbury, Associate Professor, Social Policy Research Centre, UNSW and Peter Whiteford, Professor, Crawford School of Public Policy, Australian National University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Budget deficit to hit $184.5B this financial year, unemployment to peak at 9.25% in December: economic statement



Lukas Coch/AAP

Michelle Grattan, University of Canberra

Treasurer Josh Frydenberg has announced massive budget deficits of $85.8 billion for the just-finished 2019-2020 financial year and $184.5 billion projected for 2020-2021.

Growth is set to be negative for last financial year and the current one. The government’s economic statement forecasts cuts of 0.25% in GDP in 2019-20 and a reduction of 2.5% in the current financial year.

Unemployment is expected to peak at about 9.25% in the December quarter.

Employment is forecast to fall by 4.4% in 2019-20, but recover by 1% in 2020-21.

The unemployment rate averaged 7% in the June quarter 2020, and is forecast to be 8.75% for the June 2021.

A table containing 'major economic parametres'

Treasury

The statement shows debt levels rising markedly in the wake of the pandemic, although the government emphasises Australia still has a low level of government debt-to-GDP compared to other countries.

Net debt is estimated to be $488.2 billion in June this year. This 24.6% of GDP.

Debt is then forecast to increase to $677.1 billion at June 30 next year, which would be a rise to 35.7% of GDP.

As the government looks to the recovery, Treasurer Josh Frydenberg said: “Our economy has taken a big hit. And there are many challenges we confront. We can see the mountain ahead and Australia begins the climb. We must remain strong. We must draw strength from our resilience as a nation and a people.”

Finance Minister Mathias Cormann said “We are in a better, stronger, more resilient position than most of other countries around the world.”

Defending the high debt level, Cormann asked “what was the alternative?”

The government admits the outlook is unpredictable, and revised numbers will come in the October budget.

“The economic and fiscal outlook remains highly uncertain,” the statement says.

One massive uncertainty is what happens in Victoria. The statement takes into account the present six weeks lockdown but this could be extended if the state does not soon get on top of the second wave of the virus.

The Victorian government on Thursday reported 403 new cases, and five deaths including a man in his 50s. There were 19 new cases in NSW.

The statement says GDP is forecast to have fallen by 7% in the June quarter, but will grow in the September quarter by 1.5%. In the calendar year of 2020, GDP is expected to fall 3.75%, but grow in calendar year 2021 by 2.5%.

Earlier this week, the government announced an extension of JobKeeper and the Coronavirus Supplement that goes with JobSeeker, although both will be scaled back after September.

Despite the government announcing these increases in support, the statement stressed the goverment’s economic response to the crisis was “temporary and targeted” with measures designed to support the economy without undermining the structural integrity of the budget.

a table containing 'budget aggregates

Treasury

Revenue is taking a major knock from the fallout of the pandemic.

Total receipts, including earnings of the Future Fund, have fallen by $33 billion in 2019-20 and $61.1 billion in 2020-21 since the budget update last December.

Since that update, tax receipts have been revised down by $31.7 billion for the just completed financial year, and $63.9 billion for the current financial year.




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“The outlook for tax receipts remains uncertain. This reflects both uncertainty around the economic outlook, and how this interacts with structural and administrative features of the tax system, such as the ability of taxpayers to carry forward losses to offset future income,” the statement says.

It says payments have increased by $187.5 billion over two years from the budget update.

They are expected to reach $550 billion for the 2019-20 year, which is 27.7% of GDP, and rise to $640 billion in the current financial year, representing 33.8% of GDP.

“This increase is as a result of the Government’s targeted responses to the COVID-19 pandemic to support Australia’s economy, as well as the impact of automatic stabilisers including the payment of unemployment benefits,” the statement says.The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

The compromise that might just boost the JobSeeker unemployment benefit


Michael O’Neil, University of Adelaide and Peter Gill, University of Adelaide

The government is about to make an historic decision.

The JobSeeker unemployment benefit (previously called Newstart) has scarcely increased in real terms since 1994.

In that time general living standards, as measured by real gross domestic product per capita, have almost doubled, climbing 83%.

Other benefits such as the age pension have broadly kept pace with living standards. They climb in line with wages rather than the slower-growing consumer price index.

In dollar terms the single rate is now just A$565.70 per fortnight, close to the poverty line and well below the $860.60 paid to single pensioners. Back in the early 1990s it was close to the pension.


Source: Ben Phillips ANU, DSS

The Organisation for Economic Co-operation and Development said in 2010 Newstart had fallen so low as to call into question its effectiveness in “enabling someone to look for a suitable job”.

In March, as the scale of the looming job losses from coronavirus and the responses to it became clear, the government effectively doubled JobSeeker, boosting the $565.70 single payment and other lower payments by a $550 per fortnight coronavirus supplement in an acknowledgement that unemployed people “need to meet the costs of their groceries and other bills”.

The increase took effect from April 27, but was temporary, for six months after it received royal assent, meaning it is due to expire in late September.




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The economic statement due on Thursday will provide an opportunity for the government to cushion the blow by either extending the life of supplement or permanently lifting JobSeeker.

It’ll also provide an opportunity for it to say no, allowing JobSeeker to collapse back to where it was.

An increase suggested to the recent Senate inquiry by the South Australian Centre for Economic Studies was $80 to $120 per week, enough to restore it to where it was relation to other benefits in the early 1990s.

Some Senators wedded to low JobSeeker

But the government will need to get over its seemingly ideological premise that the unemployed are in some way responsible for their own misfortune and are usually undeserving of the support needed to meet living costs.

This sentiment on display in the dissenting report by Coalition members of the Labor and Greens dominated inquiry which recommended JobSeeker be increased.

In explaining their position in April, after the the government had temporally doubled JobSeeker, Coalition Senators Wendy Askew and Hollie Hughes, argued that a permanent increase could carry with it “disincentive effects in respect of engagement with the workforce”.




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Put plainly, they were concerned that if JobSeeker was boosted to a reasonable level (as it has been, temporarily) people mightn’t want to work.

Yet the transcript of evidence given by treasury officials at the inquiry reveals the department has never been asked to examine that question.

Asked whether the treasury had ever done any modelling of an increase in the payment now known as JobSeeker, deputy secretary Jenny Wilkinson relied “no”. Asked again: “You’ve never done that?” she replied “no”.

Others have done the analysis.

The compromise that might just stick

Deloitte Access Economics believes an increase would boost the size of the economy and boost the number of people employed by 12,000.

A compromise that might be acceptable to members of the Coalition who oppose lifting JobSeeker but support “job-ready” training programs, might be an increase in the JobSeeker allowance of, say, $80 per week, split into two.

Half of the increase would be a cash increase without conditions, the other half would be provided for accredited training.

With conditions in place to ensure participation in bona fide training, the increase could drive the skills development both employers and the unemployed want.




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The training that would emerge would be market-driven, responding to the post-COVID-19 needs of employers and potential employees.

The Productivity Commission has implicitly endorsed such an approach, reporting in May that there was “a manifest capacity to better allocate the $6.1 billion in government spending on vocational education and training to improve outcomes”.

JobSeeker could help, both supporting Australians who are out of work and supporting them to get back into work.The Conversation

Michael O’Neil, Executive Director, SA Centre for Economic Studies, University of Adelaide and Peter Gill, Research Associate, SA Centre for Economic Studies, University of Adelaide

This article is republished from The Conversation under a Creative Commons license. Read the original article.

JobTrainer explained: what is it, who qualifies, what does it pay?



Shutterstock

Peter Hurley, Victoria University

The Australian government has announced a A$2 billion skills package it has dubbed JobTrainer.

It follows JobKeeper, the wage subsidy program (worth about A$70 billion); Jobseeker, which doubled the A$550-a-week unemployment benefit (as well as other government income payments, at a cost of A$14 billion); and JobMaker, providing A$250 million to stimulate work in the entertainment, arts and screen sectors.




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Government announces $2.5 billion package to support training and apprenticeships


The JobTrainer package has two parts.

The first part, worth A$1.5 billion, is aimed at keeping those already in apprenticeships and traineeships employed.

The second part is aimed at school leavers and those looking for work. It provides A$500 million for vocational education and training courses. That funding is conditional on matching funds from state and territory governments.

Subsidising wages

The A$1.5 billion to subsidise the wages of currently employed apprentices and trainees extends a pre-existing program called Supporting Apprentices and Trainees.

It covers half the wage eligible employers pay apprentices and trainees, up to A$7,000 a quarter (A$28,000 a year). This compares to A$9,750 the Jobkeeper pays as a flat rate of A$750 a week.

But unlike JobKeeper, employers are not required to demonstrate reduced turnover to qualify.

There is a cut-off criteria according to organisation size, but it’s more generous than the scheme it extends. Previously the subsidy was only available to businesses with fewer than 20 employees. Now the limit is 200.

The federal government estimates about 90,000 businesses will use the scheme, supporting about 180,000 apprentices or trainees. The scheme is scheduled to run till March 31 2021.



Vocational education and training

The second part of the JobTrainer announcement is expected to support an extra 340,000 free or low-cost course places from September 2020 – dependent on the states and territories matching the federal goverment’s A$500 million.

Funding will prioritise courses in areas the National Skills Commission has identified to as likely to see job growth. Examples nominated include health care and social assistance, transport, warehousing, manufacturing, retail and wholesale trade.

Many of the 340,000 training places are likely to be shorter courses, known as skills sets, which are parts of full qualifications.

These skills sets can provide students entry into new industries and also pathways to full qualifications which Australians can access through existing funding and subsidy arrangements.

Public, not-for-profit and private training organisations will all be eligible to apply for funding to provide these courses.

The vocational education and training system has suffered many problems over the past decade – including policies that resulted in widespread rorts and funding cuts.

Even with an extra $1 billion in funding, total government support is still likely to be lower than its 2012 peak.



What’s missing from JobTrainer

JobTrainer doesn’t provide any new incentives or subsidies to encourage employers to take on new apprentices or trainees.

In April and May 2020 the number of new apprentices and trainees fell 33% on the same months in 2019.

The Mitchell Institute has previously highlighted how fewer apprenticeships and traineeships can have negative long term effects.




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This is especially true for school leavers. About 12% of all school leavers take an apprenticeship or traineeship as a pathway into the workforce.

Not making a successful transition from school to the workforce is associated with poor long-term outcomes. These include higher rates of long term unemployment, high incidences of health problems and a lifetime engagement with the workforce characterised by low pay and precarious work.

Fewer new apprenticeships also disrupts the pipeline of skilled workers. An apprenticeship usually takes four years. This means a reduction in new apprentices now will result in fewer people completing their apprenticeship in four years’ time.

The JobTrainer policy probably won’t be enough to keep all current apprentices and trainees in their jobs. Employers faced with reduced work and uncertain conditions may still make the difficult decision to suspend or cancel a training contract.

But it is certainly welcome assistance to keep those losses to a minimum.The Conversation

Peter Hurley, Policy Fellow, Mitchell Institute, Victoria University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

In praise of the office: let’s learn from COVID-19 and make the traditional workplace better


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Geoff Plimmer, Te Herenga Waka — Victoria University of Wellington; Diep Nguyen, Edith Cowan University; Esme Franken, Edith Cowan University, and Stephen Teo, Edith Cowan University

Having had to rapidly adjust to working from home due to COVID-19, many people are now having to readjust to life back in the office. Many will have enjoyed aspects of what is sometimes called “distributed work”, but some may be dreading the return.

So is there a middle ground? Could hybrid work arrangements, known for boosting well-being and productivity, be a more common feature of workplaces in the future?

We say yes. Organisations need to recognise the valuable habits and skills employees have developed to work effectively from home during the lockdown. But they will need good strategies for easing the transition back into the physical workplace.

In doing so, they should aim for the best of both worlds — the flexibility of distributed work and the known benefits of the collaborative workplace.




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Good riddance to hot-desking

A good start would be a proper re-evaluation the two worst aspects of office life: crowded open-plan designs and so-called “hot-desking”.

Cramped shared offices and free-for-all hot-desking are both known for their negative impacts on quality of workplace life. The results are often interpersonal conflict, reduced productivity and higher rates of sickness.

Some organisations have already done away with hot-desking in an effort to improve physical and mental well-being. Acknowledging the evidence that tightly packed, cost-saving, open-plan office arrangements have not delivered what was promised should be another priority.

Hopefully, the impact of COVID-19 on business as usual will spell the end of these often poorly thought through management fads.

Work-life imbalance: how do companies help their employees and also boost productivity?
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Working from home can be isolating

At the same time, there is no need to throw the baby out with the bathwater. The office still has its advantages, and there is research showing that working from home has clear disadvantages for employees and organisations when it is offered as a permanent arrangement.

One study involved a large (anonymous) US Fortune 100 technology firm. It began as a traditional survey of what it was like for individuals to work from home, but evolved into a study of the effect of what happened to the company’s community when working from home was normalised.




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The option of unrestricted distributed work meant employees simply stopped coming to work at the office. Many reported the well-known benefits of working from home, such as work-life balance and productivity.

They also reported a kind of “contagion effect”. As colleagues began to stay at home a tipping point arrived where fewer and fewer people opted to work in the office.

But this actually increased a sense of isolation among employees. It also meant the loss of opportunities to collaborate through informal or unplanned meetings. The chance to solve problems or be given challenging assignments were lost as well.

Those who participated in the study said social contact and productively interacting with colleagues was the main reason they wanted to come to work. Without it there was no real point. The research raises the possibility of a net loss in well-being if everyone were to work remotely.

Well-being and job satisfaction depend on a range of factors, including having clear goals, social contact and the structure of the traditional working day. Of course, jobs can also be toxic if there is too much structure. But fully distributed work may not provide the support, identity and community that offices provide for some.

Nor is technology always adequate when it comes to the subtle value of face-to-face catch ups. Five minute water-cooler talks and post-meeting debriefs still matter for both productivity, social contact and cohesion.

A different kind of management: motivating and maintaining morale in a distributed workplace requires new skills.
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Management has to adapt too

None of which is to suggest there are not identifiable advantages of distributed work and the flexible workplace. As many of us discovered during the lockdown, just avoiding the daily commute helped with lowering stress and better work-life balance. Choosing when we worked was attractive too.

But this requires better management skills. Distributed workers require different (often better) engagement strategies, including the ability to build mutual trust.




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Research into how best to manage the health and safety of distributed workers has found that some leaders simply can’t adapt to the digital environment. Trust, consideration and communicating a clear vision or sense of purpose matter more for distributed workers than for those in the traditional office.

Recognition, reward, development and advancement in a distributed working environment will all need special attention. So too will ways to deal with people not pulling their weight, maybe because of too much time on social media.

Even the simple benefits of spontaneous humour in meetings or informal team interactions are easily lost with “e-leadership”, so new ways of building and maintaining morale are vital.

This is not an either/or question. Rather, the challenge is to strike a new balance — how to retain the benefits of distributed work while maintaining the sense of community that comes from personal interaction in the office.The Conversation

Geoff Plimmer, Senior lecturer in Human Resource Management, Te Herenga Waka — Victoria University of Wellington; Diep Nguyen, Lecturer, Edith Cowan University; Esme Franken, Lecturer in Management, Edith Cowan University, and Stephen Teo, Professor of Work and Performance, Edith Cowan University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Heading back to the office? Here’s how to protect yourself and your colleagues from coronavirus



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Lisa Bricknell, CQUniversity Australia and Dale Trott, CQUniversity Australia

One of the most profound ways the COVID-19 pandemic has affected our lives has been in the way we work. For people lucky enough to keep their jobs, and for those of us in professions where it’s possible, working from home has become the new normal.

Australia’s success in “flattening the curve” means restrictions are now being lifted. With this, many employers are bringing their staff back into the office, or at least contemplating doing so.

But as the current outbreaks in Victoria show, it’s dangerous to think we’re now safe from the threat of COVID-19.

So, what do we need to consider as we take those first tentative steps back into the office?




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First, how does the virus spread?

While there’s a lot we still don’t know about SARS-CoV-2, the coronavirus that causes COVID-19, we do know it spreads most effectively from person to person in droplet form. Infected people emit these droplets when they sneeze, cough, and even speak.

Those droplets can be transmitted directly through the air — say when an infectious person coughs in the direction of someone else close by — or they can settle on surfaces, where they can remain viable for hours.

The virus enters the body of a non-infected person through contact with mucous membranes in the nose, mouth or eyes and attaches to cells in the upper respiratory tract to establish infection.

Many of us are keen to get back to the office.
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What does this mean for office workers?

In many workplaces, employees share a small office space, work in an open-plan office, or use “hot desks” that are shared between several different employees on different shifts.

Workers in these situations are often required to work for long periods in environments that make it hard to maintain the recommended 4m² distancing rule.

This combination — several hours spent in close contact — increases the risk of COVID-19 transmission. This is illustrated by an outbreak in an open-plan call centre in Seoul, where more than 43% of workers contracted COVID-19 during February and March.




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Considerations for employers

First, each employee in a shared office should be able to have at least 4m² to themselves. If this isn’t possible, it would be a good idea to stagger staff or allow them to continue working from home for now.

Second, think about airflow. Small offices often have insufficient airflow to dilute the virus, and, if an infectious person is present, could end up with high concentrations of viral particles over the course of an hour or so.

Conversely, higher rates of airflow combined with poor ventilation can also lead to infection, as droplets can be carried further.

So where possible, increase ventilation and air exchange in open-plan workspaces. Increasing the ratio of fresh air intake to recirculated air can reduce the concentration of virus particles in air conditioned spaces. Even simply opening windows can reduce viral spread.

Ramping up cleaning practices is a must.
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Third, cleaning protocols need to be increased. Where once a twice weekly visit from a contracted cleaner to vacuum the floors, empty the bins and quickly wipe over surfaces was considered sufficient, during COVID-19 you need to ensure a thorough daily clean of all surfaces.

Frequently touched surfaces, such as desks, light switches, door handles, phones, staircase railings, touch screens, keypads, taps and toilets should be given special attention and may require more frequent cleaning.




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Fourth, if a worker becomes sick with respiratory symptoms, isolate them from other staff and arrange for them to go home. Advise them to get tested for COVID-19 and not return to work until they have a negative result.

Similarly, reinforce the message, “if you’re sick, get tested and don’t come to work”. Now more than ever, the culture of “soldiering on” while unwell puts others at risk.

Finally, you might also consider asking employees to wear face masks at work. Face masks are unlikely to protect the person wearing them but can limit the disease being spread by coughs and sneezes.

Considerations for employees

First, you should clean equipment like keyboards, phones and mice regularly, and definitely between each user if desks are shared. Simply wipe your desk and equipment with a domestic spray cleaner.

Second, the best protection against the virus is personal hygiene. Washing your hands with soap and water offers excellent protection against SARS-CoV-2. When you can’t wash your hands, use an alcohol-based hand sanitiser instead.

You should wash or sanitise your hands regularly throughout the day, especially any time you touch anything you suspect someone else has recently been in contact with.

Both employers and employees can reduce the risk COVID-19 will spread in an office environment.
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Third, maintain a distance of 1.5m from other people to protect yourself from airborne droplets.

Fourth, practise good respiratory hygiene by coughing and sneezing into a tissue or the crook of your elbow. This prevents viral particles spreading over surfaces and toward people around you.

Lastly, if you have any symptoms, don’t go to work. Get tested as soon as possible and stay at home until you receive the results.




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The Conversation


Lisa Bricknell, Senior Lecturer in Environmental Health, CQUniversity Australia and Dale Trott, Lecturer, Environmental Health, CQUniversity Australia

This article is republished from The Conversation under a Creative Commons license. Read the original article.