Vital Signs: amid the lockdown gloom, Australia’s jobless rate hits decade low of 4.9%

Posted on July 18, 2021 by particularkev

Richard Holden, UNSWIn other circumstances Treasurer Josh Frydenberg might be dancing a jig.

But the pall of the Greater Sydney lockdown, which has now spilled over to Melbourne declaring its fifth lockdown, meant there was no room for smiling yesterday about the latest jobs figures, showing Australia’s unemployment rate in June fell below 5% for the first time in a decade.

The labour force survey data from Australian Bureau of Statistics shows 22,000 fewer Australians were unemployed last month compared to May. This pushed the unemployment rate down to an eye-catching (if not yet eye-popping) 4.9%.

Next month’s figures, of course, are unlikely to be so rosy. But these numbers still enable us to understand the progress the Australian economy is making with a number of important issues predating the COVID crisis.

Importantly, the lower unemployment rate wasn’t due to a reduction in labour-force participation — sometimes known as the “giving up effect”, when folks just stop looking for work because they don’t expect to find a job. The participation rate was steady at 66.2%. In fact, the number of employed persons increased by 29,100 to 13,154,200.

There was even good news for younger Australians, with the youth unemployment rate down by 0.5 percentage points to 10.2%. This reflected a strong recovery from the pandemic, being 6.1 percentage points lower than a year ago in June 2020.

Total hours worked

The one statistic I always focus on is the total hours worked number. This is because the headline unemployment rate, as critics always point out, doesn’t tell us to what extent people are getting enough work.

On this measure there was slightly less good news. Total hours worked in June were down 1.8%, by 33.4 million hours to 1,781 million hours; and that’s seasonally adjusted, so its not just some “winter” thing.

Monthly hours worked in all jobs, seasonally adjusted

ABS Labour Force Survey, June 2021., CC BY-SA

Slow wages growth

In 2019 one could best characterise the Australian economy as barely growing in per-capita terms. Wages growth was stubbornly low, while unemployment and underemployment were unacceptably high.

Having recognised this — too late, mind you, but at least eventually — the Reserve Bank cut interest rates from 1.50% to 0.75% in an effort to get wages up, unemployment down, and inflation back into the central bank’s 2-3% target zone. Inflation has been outside its target band for the entirety of Philip Lowe’s governorship, which began in September 2016.

The pandemic pushed the RBA to drive the cash rate close to zero, and also buy government bonds to push down longer-term interest rates.

By looking at where unemployment, underemployment and wages growth stand relative to 2019 levels, we learn something about Australia’s pandemic recovery.

In doing so, we should not lose sight of fact the economy in general — and the labour market in particular — were not in good shape pre-COVID, and policies to address those issues have long been needed.

Edging closer to where we need to be

So, how’s that going? In some sense, pretty well.

June’s 4.9% unemployment rate is the lowest since June 2011. Getting down to something with a “4” in front of it edges Australia closer to reducing the slack in the labour market sufficiently to push wages up.

But the task is certainly not complete.

The aggressive monetary policy being used by the RBA and the “Frydenberg pivot” to aggressive fiscal policy at this year’s federal budget are both aimed at reducing unemployment and hence increasing wages.

However, no one really knows how low unemployment needs to get in Australia to getting wages moving again in earnest. The RBA’s official position is maybe 4.5%. Lowe has said it may well be a fair bit lower.

The smart path, arguably, is “let’s find out” — the central bank should keep using monetary policy and the treasury keep using fiscal policy until we see real wages growth at a sustained level. My own guess is that means getting the unemployment rate down to just below 4%.

Reigniting an immigration debate

The backdrop for these improvements in the labour market is a closed international border. This is likely to become a hot debate — especially since Lowe fired the starter pistol last week by suggesting Australia’s historically high levels of immigration had been helping keep wages low.

Those were rather careless, or at least ill-advised, remarks from the central bank governor, contrary to solid academic evidence pointing the other way.

He may say more on this at a future date — perhaps after some discussion and reflection. But, as he is so fond of saying, “only time will tell”.

Richard Holden, Professor of Economics, UNSW

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

Do I get time off work for my COVID shot? Can I take a sick day?

Posted on May 28, 2021 by particularkev

Elizabeth Shi, RMIT UniversityAustralia’s COVID vaccine rollout has reached its next phase, now people aged 50 and over are officially eligible to receive their shot from a GP, respiratory clinic or mass vaccination hub. People under 50 are also getting vaccinated in some states.

These are the first age groups to be vaccinated in Australia likely to be in paid work. Until now, most people to have received their shot will have been over 70, and probably retired. So people eligible now might wonder how to fit in a vaccine appointment around work commitments.

If you need, or want, to be vaccinated during work hours, do you take a day’s leave or a sick day? And if you’re ill with side-effects, can you take a sick day to recover?

Let’s assume you’re not a doctor or nurse, or have some other occupation with a workplace, on-site vaccination clinic. This means the vast majority of Australians will need to factor in time travelling to the clinic, administration (such as filling in consent forms), the shot itself, 15-30 minutes waiting in case there are any immediate side-effects, and travelling back to work.

Let’s assume for now you’re an employee, entitled to paid annual leave and paid personal leave (which includes sick leave). If you’re a casual or independent contractor, the situation’s different and explained below.

Can I get time off work to get my COVID vaccine?

Whether you’re a full- or part-time employee, taking time off to get the COVID vaccine is similar to taking time off for the flu vaccine. You will usually need to take paid annual leave.

Unless your employment contract says otherwise, you are not entitled to take paid sick leave to get vaccinated. Sick leave is only for when you’re ill or injured. Being vaccinated is not considered an illness or injury.

Despite this, employers can exercise their discretion to allow you to take paid sick leave to get vaccinated.

Can I take sick leave if I feel unwell afterwards?

As a full- or part-time employee, you are entitled to take paid sick leave if you feel unwell after being vaccinated and can’t work.

You may need to provide reasonable evidence you are unfit for work, such as a medical certificate.

What if I’m a casual employee or an independent contractor?

Casual employees and independent contractors are not entitled to paid annual leave or paid sick leave.

However, if you are a casual employee and are feeling unwell after receiving your vaccine, check if your organisation has a provision for “special paid sick leave”. Some do.

This type of special leave is not a mandatory legal entitlement. But if your organisation doesn’t provide it, you may be able to negotiate it. Independent contractors can also negotiate with the business that contracts them.

To address the hardships casuals and independent contractors face, Victoria has announced a two-year trial of its Secure Work Pilot Scheme, which is due to begin by 2022.

This will provide up to five days of paid sick leave and carer’s leave at the national minimum wage for casual or insecure workers in sectors with high rates of casual employment, such as aged care, cleaning and hospitality.

What if I work in retail or hospitality?

If you work in retail, hospitality or some other sector that puts you at higher risk of COVID due to increased customer contact, you might be wondering if there are special provisions for you.

Under workplace health and safety laws, your employer must, so far as is reasonably practicable, provide and maintain a work environment that is safe and without risks to health.

But that doesn’t mean your employer has to give you paid time off during working hours to get vaccinated. That’s different to, say, the employer of a construction worker who has to provide a hard hat or other personal protective equipment for safety reasons.

Vaccines and hard hats seem to be treated differently, even though you could argue they both protect workers from serious illness or injury.

What other options are there?

If you’ve used up all your paid annual leave, you can request unpaid leave to get your vaccine.

Then there’s the alternative of booking an appointment for one of your days off, with some clinics offering extended hours, including evenings and weekends.

The Fair Work Ombudsman has more information about your workplace rights and obligations when it comes to COVID vaccines.

Elizabeth Shi, Senior Lecturer, Graduate School of Business and Law, RMIT University

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

Frydenberg spends the budget bounty to drive unemployment down to new lows

Posted on May 12, 2021 by particularkev

Peter Martin, Crawford School of Public Policy, Australian National UniversityNever before has a budget spent so much to supercharge the economy after the worst of a recession has already passed.

The economy bounced back from last year’s COVID recession far more sharply than the treasury (or just about anyone else) expected.

The bounty from the higher-than-expected tax collections that flowed from more people than expected in work, a much higher-than-expected iron ore price, and lower than expected unemployment benefits, should amount to A$26.8 billion this financial year, $15.5 billion the next, and $18.6 billion the year after that.

But rather than bank those riches and improve the budget bottom line, as the Coalition’s budget strategy used to require it to do, the government has instead decided to spend the lot.

It will spend $21 billion of this year’s $26.8 billion; it will spend or give up in new tax concessions $26.9 billion — far more than next year’s $15.5 billion bounty, and so on.

Treasurer Josh Frydenberg has come good on his historic promise to keep spending way beyond the crisis, to drive the unemployment rate down below where it was when the pandemic started.

The budget predicts an unemployment rate of 4.75% by mid-2023 and 4.5% by mid-2024.

If delivered (and the treasurer’s revised strategy published in the budget requires him to keep spending until it is), it will mark what the budget papers describe as, “the first sustained period of unemployment below 5% since before the global financial crisis, and only the second time since the early 1970s”.

In the same way as Australia emerged from the early-1990s recession with a dramatically lower inflation rate because the Reserve Bank was determined to salvage something from the carnage, Frydenberg has decided to exit the COVID recession with an ongoing lower floor under unemployment.

Both the treasury and Reserve Bank believe Australia can sustain much lower unemployment than the 5-6% it has grown used to. The treasury’s estimate is 4.5%; the Reserve Bank’s is nearer 4%. Before COVID, the United States managed 3.5%.

If achieved, it will mean hundreds of thousands more Australians providing services, drawing paycheques, and paying tax. And no longer on benefits.

A dramatic budget graph tracking the fortunes of every Australian whose payroll was reported to the tax office throughout 2020 shows the biggest victims of the COVID recession — by far — were those without post-school education. At the deepest point of the COVID recession in May, they were almost three times as likely to have lost their jobs as Australians with degrees.

The budget provides an extra $400 million for low-fee or no-cost training for jobseekers, to be matched by the states; an extra $481 million for the transition to work employment service directed at Australians aged 24 and under; and a further $2.4 billion to the Boosting Apprenticeship Commencements program.

But most of what it intends to do for jobs is the indirect result of a barely precedented expansion in spending and tax concessions in all sorts of areas.

The extra $17.7 billion it is spending on aged care over four years ought to create many jobs, as should the extra $13.2 billion it is spending on the National Disability Insurance Scheme.

The $1.7 billion it is spending on making childcare more affordable should both create jobs in the sector and free up more parents to return to work.

An extra $20 billion in business tax concessions should help as well.

The budget’s break with the past isn’t its dramatic expansion of discretionary spending. That’s common in recessions. What’s unusual is that spending is being ramped up when we are not in recession.

In the words beloved of economists, the spending is “pro-cyclical” rather than “counter-cyclical”. It is designed to supercharge our exit from recession rather than merely bring it about.

And there’s little sign of the spending stopping.

If this government or the next achieves success in driving the unemployment rate down to 4.5%, it will want to go further. It will keep going further right up until we get inflation near the top of the Reserve Bank’s 2-3% target band and wage growth in excess of 3%, neither of which this budget foresees in forecasts going out four years.

Government debt, anathema to the Coalition when Labor ran it up during and after the global financial crisis, isn’t much of a constraint.

The Reserve Bank holds much of the government’s debt (it didn’t during Labor’s time) and is buying as much as it needs to to keep interest rates low. Recently, interest rates have been rising, but not for most of the government’s borrowings, which are long-term.

The budget papers show that even with net government debt at 34% of GDP and heading to 44%, interest payments on that debt are much less of a drain on the budget than they were back in the mid 1990s when net debt hit 18% of GDP.

And the times have changed. Worldwide, few nations have an aversion to government debt, especially not the United States. In Australia, the only side of politics that used to complain about debt is in currently in office.

Before COVID, the fiscal strategy spelled out in the budget as part of the Charter of Budget Honesty required the government to eliminate net debt.

Frydenberg’s revised strategy merely requires him to stabilise and then reduce net debt “as a share of the economy”.

His priority is driving down unemployment. If that helps expand the economy and so drives down net debt as a share of the economy so much the better. But he wants to do it regardless.

Peter Martin, Visiting Fellow, Crawford School of Public Policy, Australian National University

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

Exploitation in the Digital Economy

Posted on May 11, 2021 by particularkev

As boundaries between work and home vanish, employees need a ‘right to disconnect’

Posted on May 2, 2021 by particularkev

Barbara Pocock, University of South AustraliaIf you have been in a children’s playground recently, you may have seen a distracted parent absorbed in an intense phone conversation, swatting a child away.

Sure, some are ordering tickets for The Wiggles, but most are not — they are working. They might have officially knocked off, be on leave or it might be a weekend. But as surely as if they were in the office, they are at work.

Many of us know that tug of double consciousness: the child’s pressing need pitted against a complex issue on the other end of the phone demanding every neurone we can muster.

You do not have to be a carer to feel this tug. It still finds plenty of people who just want some quiet time, an uninterrupted run, a life beyond work.

It’s the growth of this tug, affecting more and more women and men, which has fuelled the push for a “right to disconnect” from work. This includes a recent significant victory for Victoria Police employees to protect their time away from work.

Availability creep

Our forebears would not recognise the ephemeral way we work today, or the absence of boundaries around it. But powerful new technologies have disrupted last century’s clearer, more stable, predictable limits on the time and place of work.

This is called “availability creep”, where employees feel they need to be available all the time to answer emails, calls or simply deal with their workload.

Sydney CBD skyline with headlights on the freeway. — Australians did even more unpaid overtime during COVID than before the pandemic.
Mick Tsikas/AAP

And that was well before a pandemic that piled revolution upon revolution on the way we work. A 2020 mid-pandemic survey showed Australians were working 5.3 hours of unpaid overtime on average per week, up from 4.6 hours the year before.

These longer hours are often associated with job insecurity. In a labour market like Australia’s, where insecure work is widespread, there are strong incentives to “stay sweet” with the boss and work longer, harder and sometimes for nothing.

Health implications

So, work is now untethered from a workplace or a workday, and our workplace regulation lags well behind. This has serious implications for our mental health, work-life stress, productivity and a fair day’s work for a fair day’s pay.

Of course, flexibility is not all bad. As a researcher collecting evidence for decades about the case for greater flexibility for employees, I see silver linings in a pandemic that achieved almost overnight what decades of data-gathering could not: new ways of working that can suit workers (especially women) and their households.

However, this change has a dark side. Digital work and work-from-home have shown themselves to drive long hours of work, and to pollute rest and family time. Poor sleep, stress, burnout, degraded relationships and distracted carers are part of the collateral damage.

Disconnecting in Australia and internationally

A growing international response attests to the importance of disconnection. And it has now reached our shores.

Last month, Victoria Police’s new Enterprise Bargaining Agreement (EBA) included the “right to disconnect” from work. It directs managers to respect leave and rest days and avoid contacting police officers outside work hours, unless in an emergency or to check on their welfare. The goal is to ensure that police, whose jobs are often stressful, can switch off from work when they knock off and get decent rest and recovery time.

Swimmers at Bondi Beach pool. — There is a growing push to protect employees’ time outside work hours.
Bianca De Marchi/AAP

The “right to disconnect” has taken several forms internationally in recent decades. At individual firm level, some large companies such as Volkswagen, BMW and Daimler now simply stop out-of-hours or holiday emails or calls.

Goldman Sachs has also recently re-stated its far from radical “Saturday rule”, under which junior bankers are not expected to be in the office from 9pm Friday to 9am Sunday.

The French example

Some countries now regulate the right nationally.

Since 2017, French companies employing more than 50 people have been required to engage in an annual negotiation with employee representatives to regulate digital devices to ensure respect for rest, personal life and family leave. If they can’t reach agreement, the employer must draw up a charter to define how employees can disconnect and must train and inform their workers about these strategies.

While enforcement of the French law has attracted criticism (as penalties are weak), it has fostered a national conversation —now reaching other countries like Greece, Spain and Ireland. In early 2021, the European Parliament voted to grant workers the right to refrain from email and calls outside working hours, including when on holidays or leave, as well as protection from adverse actions against those who disconnect.

What’s next for Australia?

The Victoria Police EBA has encouraged a new level of discussion in Australia. The ACTU has backed a right to disconnect, especially for workers in stressful jobs.

Individual businesses will now be examining their obligations to ensure maximum hours of work are adhered to and “reasonable” overtime and on-call work is managed to avoid possible claims for unpaid work.

This week, The Sydney Morning Herald reported that supermarket giant Coles is trying to prevent out-of-hours work.

The consequences for companies can be expensive when digital work is not well managed. In 2018, the French arm of Rentokil was ordered to pay an ex-employee the equivalent of $A92,000 because it required him to leave his phone on to talk to customers and staff.

Beyond fair remuneration, a duty of care to provide a safe and healthy workplace is also implicated in digital work that leaks beyond working hours.

What needs to happen now

Large public sector workplaces are likely to follow Victoria Police’s example. However, EBAs now cover just 15% of workers, so this pathway won’t help most workers, many of whom are instead covered by one of the 100 or so industry or occupational modern awards.

These awards could be amended to include a right to disconnect. But more simply and comprehensively, the National Employment Standards (which apply to all workers regardless of whether covered by an award or an EBA) could be amended to provide an enforceable right to disconnect with consequences for its breach, alongside existing standards of maximum hours of work, flexibility and other minimum rights.

Given many women, low paid, private sector, un-unionised and relatively powerless workers in smaller workplaces have little chance of negotiating or enforcing a right to disconnect, it is vital the right to disconnect applies across the whole workforce.

Barbara Pocock, Emeritus Professor University of South Australia, University of South Australia

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

Budget aims at unemployment with a ‘4’ in front of it

Posted on April 30, 2021 by particularkev

Michelle Grattan, University of CanberraThe government will aim at driving unemployment below pre-pandemic levels in its May 11 budget and avoid any future sharp pivots towards “austerity”, Treasurer Josh Frydenberg will say on Thursday.

Delivering his pre-budget address on the budget’s economic and fiscal strategy, Frydenberg does not give a specific unemployment target but points clearly to wanting to see it below 5%.

Unemployment was 5.1% in February last year, on the cusp of the pandemic. The Reserve Bank has put forward a case for pushing the rate down into the “low 4s”.

In his speech, released ahead of delivery, Frydenberg says a new paper by Treasury on the Non-Accelerating Inflation Rate of Unemployment – the rate of unemployment below which inflation is expected to accelerate – puts the NAIRU between 4.5% and 5%, lower than its previous 5% estimate. (The paper will be released on Thursday, as will one on labour market participation.)

“This lower estimate of the NAIRU means a lower unemployment rate will now be required to see inflation and wages accelerate,” Frydenberg says.

“In effect, both the RBA and Treasury’s best estimate is that the unemployment rate will now need to have a four in front of it to deliver this outcome.”

Unemployment was 5.6% in March, although the April figure may be higher, after the end of JobKeeper in late March.

Frydenberg said despite doomsday predictions about the consequences of JobKeeper finishing, early signs were the labour market had remained resilient. In the fortnight to April 16, the number of people on income support fell by about 46,000.

The Treasurer said that in sharp contrast to previous recessions, following this one “we are on track for the unemployment rate to recover in around two years”.

The government’s ambitions on unemployment have shifted substantially since last year, when Frydenberg first said it would not move to fiscal consolidation until the rate was “comfortably below 6%”.

In Thursday’s speech he reaffirms that “despite the strength in our domestic economic recovery, the unemployment rate is not yet ‘comfortably below 6%’.”

He says “these are unusual and uncertain times”, so “we remain firmly in the first phase of our economic and fiscal strategy.

“We need to continue working hard to drive the unemployment rate lower.

“That is what [the] budget will do.”

The first stage of the government’s strategy – laid out last year – concentrates on promoting economic recovery; the second stage will look to fiscal consolidation and paying down debt.

“We will not move to the second phase of our fiscal strategy until we are confident that we have secured the economic recovery,” Frydenberg says.

“We first want to drive the unemployment rate down to where it was prior to the pandemic and then even lower. And we want to see that sustained.

“The last time Australia had a sustained period of unemployment below 5% was between 2006 and 2008, just prior to the GFC.

“Before that, you need to go all the way back to the early 1970s.”

Frydenberg says that “against the backdrop of a highly uncertain global economic environment, it is prudent to continue to support the economy and ensure that our recovery is locked in”.

Unlike before the crisis, “the Reserve Bank has reduced scope to lower interest rates to drive unemployment lower and wages higher.

“This has placed more of the burden on fiscal policy.”

“We want more people in jobs and in better paying jobs. This is what our fiscal strategy is designed to achieve,” Frydenberg says.

He repeats the government’s commitment to fiscal discipline while saying circumstances somewhat delay the fiscal recovery. For example corporate tax receipts take time to rebound after a downturn.

Frydenberg says Treasury previously estimated that because of the government’s interventions the economy “will be 4.5% larger in 2020-21 and 5% larger in 2021-22 than if we had not intervened.

“At that time, real GDP was not expected to regain its pre-pandemic level until the December quarter 2021.

“All indications are that we will actually have pushed through that milestone nine months earlier.

“This stronger than expected economic recovery means that our fiscal outlook in the 2021-22 budget will be driven off a higher economic base than expected in last year’s budget.

“This will assist us to achieve our medium-term fiscal strategy of stabilising and then reducing gross and net debt as a share of GDP over time.

“This again reinforces the point that the best way to repair the Budget is to repair the economy.”

While the challenge once the economy had recovered would be to rebuild fiscal buffers, “we won’t be undertaking any sharp pivots towards ‘austerity’”.

Michelle Grattan, Professorial Fellow, University of Canberra

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

JobKeeper and JobMaker have left too many young people on the dole queue

Posted on April 9, 2021 by particularkev

Kathryn Daley, RMIT University; Belinda Johnson, RMIT University, and Patrick O’Keeffe, RMIT UniversityOf the more than 870,000 Australians who lost their jobs in the first few months of the COVID-19 crisis, 332,200 – or 38% – were young Australians aged 15-24.

By June 2020, as the overall unemployment rate hit 7.4%, the youth unemployment rate spiked to 16.4%, with a further 19.7% underemployed (working fewer hours than they wanted).

As of February the overall unemployment rate had fallen to 5.8%, compared with 5.1% in February 2020. The youth unemployment rate meanwhile was 12.9%, compared with 11.5% the year before, and a further 16% were underemployed.

Prime Minister Scott Morrison has enthused about there now being “more jobs in the Australian economy than there were before the pandemic”. But that’s true only for those 25 and older: 77,600 more are employed than before the crisis. For those aged 24 and under, 74,100 fewer have jobs.

So clearly the pandemic has hit younger workers the hardest. The reasons for disproportionate impact aren’t complicated. Young people are more likely to work in casual jobs – the first to be excised in hard economic times – and in those sectors most affected by border closures, lockdowns and other measures – retail, hospitality, tourism.

Yet the federal government’s policy responses, injecting billions of dollars into the economy to support businesses and employment, have compounded this impact through deliberate yet flawed policy design.

JobKeeper has kept proportionally fewer young people in jobs. Changes allowing withdrawal of superannuation will hurt them more in the longer term. And JobMaker, the program designed specifically to encourage employment of younger workers, has proven a monumental flop.

Shut out of JobKeeper

The centrepiece of the federal government’s support measures was the A$100 billion JobKeeper program, initially paying a subsidy of $750 a week before tapering and finally being axed at the end of March.

The Reserve Bank of Australia estimates JobKeeper payments kept at least 700,000 workers off the dole queue. But to qualify, employees had to have been working for their employer for a minimum of 12 months.

This disproportionately excluded younger workers – being more likely to be recent workforce entrants, to switch jobs more than older workers, and to be in employed in casual or other forms of insecure work.

To illustrate, Australian Bureau of Statistics data from August 2019 shows young people comprised 17% of the workforce yet accounted for 46% of all short-term casual employees.

Of those employed casually, 26.4% of young people had been with their employer for less than 12 months, compared to 6.5% of those aged 25 and over. So one in four young people employed casually were not eligible for JobKeeper, compared with only one in 16 of their older counterparts.

Drawing down superannuation

JobKeeper’s design thus pushed proportionally more younger workers on to the dole queue. It also likely contributed to more of them dipping into their superannuation savings under the provisions announced by the federal government in March 2020.

Those provisions allowed Australians affected by the economic crisis to withdraw up to $20,000 from their superannuation accounts (in two rounds of $10,000 each – one last financial year, another this financial year).

The Industry Super Australia estimated about 395,000 people under 35 completely drained their super accounts.

This emptying of accounts is not surprising given the average superannuation balance by age 30 is about $28,000 for men and $23,700 for women.

But it means many will have considerably less super to retire on. The long-term cost of a 25 year-old withdrawing $20,000 is more than $100,000, compared with about $37,000 for a 50-year-old, according to estimates by financial comparison site Canstar.

Spend now, lose later

There’s also evidence the design of the super-access scheme has allowed unnecessary withdrawals. While those taking out money have had to declare they need the money to pay for essential items (such as rent or bills), there has been no scrutiny of this prior to approval.

Indeed, according to credit-scoring company Illion about two-thirds of the funds withdrawn this financial year was spent on discretionary items such as clothing, furniture, restaurants and alcohol.

As former prime minister Paul Keating has put it, the government has relied on individuals “ratting their own savings” to buttress its own stimulus spending.

More work needed

The one program meant to specifically address youth unemployment, the JobMaker Hiring Credit, has so far proven a failure. Its aim is to incentivise employers to hire job seekers aged 16 to35 with a weekly $200 subsidy, creating 450,000 jobs over two years. But in late March, Treasury officials revealed it had so far led to just 609 hires.

All unemployment is costly for individuals, families and the wider community. But high and long-term youth unemployment can have particularly dire consequences that reverberate for decades. It creates the risk of “scarring”, suppressing an individual’s job and income prospects over their entire life. That ultimately requires the government picking up the tab.

Youth unemployment was already a significant issue prior to the COVID crisis. Now, with younger people hit hardest by the pandemic’s economic impacts, it’s imperative to ensure an entire generation is not permanently disadvantaged.

Kathryn Daley, Senior Lecturer & Program Manager – Youth Work and Youth Studies. School of Global, Urban and Social Studies, RMIT University, RMIT University; Belinda Johnson, Lecturer and Program Manager, Social Science (Psychology), School of Global, Urban and Social Studies, RMIT University, RMIT University, and Patrick O’Keeffe, Lecturer, Bachelor of Youth Work and Youth Studies, RMIT University

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

The successor to JobKeeper can’t do its job. There’s an urgent need for JobMaker II

Posted on April 8, 2021 by particularkev

Renee Fry-McKibbin, Crawford School of Public Policy, Australian National University; Peter M. Downes, Crawford School of Public Policy, Australian National University, and Warwick J. McKibbin, Crawford School of Public Policy, Australian National UniversityUntil the end of last month one million workers were paid by JobKeeper.

This month there are none. Treasury thinks up to 150,000 will lose their jobs.

Credible estimates put the number higher, at as much as one quarter of a million.

In its place, the government introduced a A$4 billion JobMaker Hiring Credit. It will give employers who can demonstrate that a new employee will increase overall headcount (and payroll) $200 per week if the new hire is aged 16-29, or $100 if the new hire is aged 30-35.

Billions on offer, little takeup

Employers will get nothing for new hires aged 36 and over — no matter how disadvantaged and no matter how suitable.

The scheme hasn’t got off to a good start. It is reported to have had only 609 applications in its first seven weeks.

The October budget said it would attract 450,000 applications, creating 45,000 jobs.

The low takeup isn’t surprising.

Evidence shows when unemployment is high, the best way to target disadvantaged groups (such as young jobseekers) is not to target them, but to target high employment growth more broadly.

High employment growth disproportionately helps less-advantaged workers because they are further down the hiring queue.

The $4 billion appropriated for JobMaker is still available to be spent. If spent well, it would help consolidate what so far has been a very solid recovery.

But it needs to be simplified. JobMaker II could be set up as a tax rebate on the quarterly increase in firms’ payrolls, say 60% on any increment above 6%.

Firms that were on JobKeeper in the March quarter (its final quarter) would be allowed to deduct their JobKeeper receipts from their payroll in estimating the starting point for the calculation.

JobMaker II could save 100,000 jobs

If those firms retained their workers (and the rebate was set at 60% on any increase in payroll beyond 6%) they would receive a little over half their March quarter JobKeeper payment in the June quarter.

Most of the money would go to firms and disadvantaged workers who still need it.

The ordinary job matching process would be allowed to work, without some jobseekers being given preference over others because of factors such as their age.

And firms already thriving would have an incentive to increase their employment by even more.

But it should be announced this week

The proposal would have to be implemented quickly to maintain the momentum established by JobKeeper. With JobMaker as it is, it will slip away.

The main thing required is for the treasurer to make an announcement setting out the broad outlines.

JobMaker II could help older women.
Anderson Guerra/Pexels

The week after Easter is a time when business owners will be taking stock – working out whether they can afford to continue to carry workers who until the end of March were supported by JobKeeper.

Our modelling suggests that refashioning JobMaker along the lines we have suggested could save and generate 100,000 to 130,000 jobs over the next six months.

It would keep employment 1% higher than it would have been, generating higher wage growth and higher tax revenue leading to a lower budget deficit.

With interest rates close to zero, the employment effect would be sustained.

The impacts would be greatest for young and for low-skilled workers, with the bulk of the benefits flowing to wages rather than profits (as regrettably happened in high profile cases as a result of JobKeeper).

And without the discrimination implicit in age targeting, other genuinely disadvantaged groups, including low-income women over 35, would be better off.

Those women would be in a better position to build their superannuation balances and be less exposed to homelessness.

The economy seems on track for a rapid recovery. But with the pandemic continuing and the outlook uncertain, it’d be wise to take out insurance.

With interest rates low, even a more expensive JobMaker II would pay for itself.

Renee Fry-McKibbin, Professor of Economics, Crawford School of Public Policy, Australian National University; Peter M. Downes, Research Associate, Centre for Climate and Energy Policy, Crawford School of Public Policy, Australian National University, and Warwick J. McKibbin, Chair in Public Policy, ANU Centre for Applied Macroeconomic Analysis (CAMA), Crawford School of Public Policy, Australian National University

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

What happens when you free unemployed Australians from ‘mutual obligations’ and boost their benefits? We just found out

Posted on March 29, 2021 by particularkev

Elise Klein, Australian National University; Kay Cook, Swinburne University of Technology, and Susan Maury, Monash UniversityDuring COVID-19 the government ran what turned out to be a giant real-world experiment into what happens when you boost someone’s unemployment benefits and free them of the “mutual obligation” to apply for jobs.

On April 27 2020 the government as good as doubled the $565.70 per fortnight JobSeeker payment, lifting it by $550 per fortnight for what turned out to be six months. In September the boost dropped to $250 per fortnight, and in December to $150 per fortnight.

Next Thursday the boost vanishes, although the base rate of JobSeeker will climb by a less-than substantial $50 a fortnight, leaving recipients $100 a fortnight worse off than they have been, $500 per fortnight worse off than back when JobSeeker doubled and back well below the poverty line.

From Thursday April 1 they will also be subject to much more demanding work tests, having to show they have applied for a minimum of 15 jobs a month, climbing to 20 jobs a month from July 1.

On top of that the government has announced

a return to compulsory face-to-face meetings with Jobactive providers
work-for-the-dole after six months of unemployment
a dob-in line for employers to report jobseekers who seem not to be genuine
increased auditing of job applications to ensure they are legitimate

They are the sort of “mutual obligations” that were scrapped while JobSeeker was doubled.

Yet the government’s natural experiment where they doubled benefits and freed recipients of “mutual obligations” provides us with an opportunity to examine how a more generous approach affected recipients and whether, as the government says, a tougher approach is needed in order to compel people to work.

During last year’s more generous approach, we conducted an online survey of JobSeeker recipients and found that (contrary to what appears to be the government’s expectation), it was helping get people into work.

Freed of “mutual obligations”, many were able to devote time to reengaging with the workforce.

As one respondent said,

I was able to focus on getting myself back into the workforce. Yes, mutual obligation activities PREVENT people from being able to start a new business or re-enter the workforce as an employee

And the extra income freed recipients to do things that would advance their employment prospects; either through study, through properly looking for work, or buying the tools needed to get work.

One said

I could buy things that helped me with employment — equipment for online work, a bicycle for travel, a proper phone”

An Australia Institute review of unemployment payments and work incentives in 33 OECD countries found something similar — that higher payments correlate to lower unemployment.

Another respondent said the suspended mutual obligation requirements made it easier to care for an elderly parent during pandemic and their recovery from major surgery.

Another said she had been able to focus on her health needs and her children.

People on social security are often accused of being dependent on welfare, but it’s often the economy and society that are dependent on their unpaid labour.

Yet (except for during the worst of the pandemic) these people have been denied a safety net that ensures their survival.

Fewer obligations meant parents were better able to care for children.
Shutterstock

The inadequacy of payments goes to a major and enduring flaw in the Australian social security system — its inability to recognise all of the productive activities people undertake, including unpaid care largely undertaken by women.

The decisions the government took during 2020 made a major difference to the lives of people outside the formal workforce.

They enabled them to turn their attention away from day-to-day survival towards envisioning and realising a more financially and emotionally sustainable future for themselves and their dependants.

The flow-on benefits, to all of us, ought to be substantial.

The government ought to be very interested.

If it was, it would examine the findings further, but they don’t seem to be on its radar.

Elise Klein, Senior Lecturer, Australian National University; Kay Cook, Senior Lecturer, Justice and Legal Studies Department, Swinburne University of Technology, and Susan Maury, PhD candidate in Psychology, Monash University

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

Top economists want JobSeeker boosted by $100+ per week and tied to wages

Posted on November 30, 2020 by particularkev

Peter Martin, Crawford School of Public Policy, Australian National University

Once about as high as the pension, the JobSeeker (Newstart) unemployment payment has fallen shockingly low compared to living standards.

It’s now only two thirds of the pension, just 40% of the full-time minimum wage and half way below the poverty line.

JobSeeker has fallen relative to other payments because while the pension and wages have climbed faster than prices, JobSeeker (previously called Newstart) has increased only in line with prices since 1991.

In an apparent acknowledgement that JobSeeker had fallen too low, the government roughly doubled it during the coronavirus crisis, introducing a supplement to enable people to “meet the costs of their groceries and other bills”.

But that supplement is being wound down, from A$225 per week to $125 on September 25, and again to $75 on January 1, before expiring on March 31.

After March, the single rate of JobSeeker (including the $4.40 per week energy allowance) will drop back to about $287.25 per week.

JobSeeker vs age pension

Source: Ben Phillips ANU, Services Australia

Ahead of a decision about any permanent increase expected early next year, The Conversation and the Economic Society of Australia asked 45 of Australia’s leading economists where they thought JobSeeker should settle.

Only four think it should revert to $287.25 per week.

All but eight want a substantial increase. More than half (24 out of 45) want an increase of at least $100 per week.

Economic Society of Australia/The Conversation, CC BY-ND

The results suggest the economists would be dissatisfied with a decision to merely increase JobSeeker by $75 per week in line with the supplement that is due to expire at the end of March.

The 45 members of the society’s 57-member panel who responded include Australia’s preeminent experts in the fields of microeconomics, macroeconomics economic modelling, labour markets and public policy.

Among them are former and current government advisers, a former member of the Reserve Bank board and a former member of the Fair Work Commission’s minimum wage panel.

Many want an increase of about $150 a week to bring JobSeeker close to the age pension and 50% of median income.

Curtin University’s Harry Bloch asked (rhetorically) whether unemployed people had “lower needs than those on the aged pension”.

Labour market specialist Sue Richardson said keeping payments so low that people lost dignity and hope and suffered material deprivation hurt not only the people who were unemployed, but also the thousands of children who grew up in their households.

A scant incentive to shirk

She knew of no evidence that suggested a low rate of JobSeeker increased the likelihood of an unemployed person getting a job.

Jeff Borland said even if JobSeeker was increased by $125 per week, those on it would still earn less than all but 1% of full-time adult workers and would face plenty of remaining financial incentives to get paid work.

In research to be published in The Conversation on Monday he examines a real-life experiment: the temporary near-doubling on JobSeeker between March and September, and finds it played no role in creating unfilled vacancies.

Emeritus Professor Margaret Nowak said JobSeeker had been driven to the point where it denied unemployed Australians the shelter, food and transport they needed to find work.

Former Liberal party leader John Hewson described the failure to adjust JobSeeker for three decades as “immoral”, and a national disgrace driven by “little more than prejudice”.

Going forward, there was overwhelming agreement among those surveyed that once JobSeeker was restored to an acceptable level, it should be linked to wages (in line with the pension) rather than increase with prices as before.

Two thirds of those surveyed want JobSeeker increase in line with wages, and of those who do not, several want the pension to increase more slowly in order to ensure the two move in sync.

Gigi Foster and Geoffrey Kingston propose a half-way house – increases in both the pension and JobSeeker halfway between increases in the consumer price index and wages.

Wages determine living standards

Others suggest practical measures to make JobSeeker better at getting Australians into jobs. Beth Webster suggests reducing the rate at which JobSeeker cuts out with hours worked to encourage part-time workers to take on more hours.

Tony Makin suggests a relocation allowance to help people take on jobs distant from their current place of residence.

None of the economists surveyed expressed concern about the budgetary cost of restoring the relative position of JobSeeker, estimated by the Parliamentary Budget Office to be $4.8 billion per year for an increase of $95 per week.

Several expressed a desire to put the issue behind them, increasing JobSeeker to a reasonable proportion of the pension or median wage and leaving it there so that, in the words of Saul Eslake, “this issue never arises again”.

Individual responses

Peter Martin, Visiting Fellow, Crawford School of Public Policy, Australian National University

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

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Category Archives: Employment/Work

Vital Signs: amid the lockdown gloom, Australia’s jobless rate hits decade low of 4.9%

Total hours worked

Slow wages growth

Edging closer to where we need to be

Reigniting an immigration debate

Do I get time off work for my COVID shot? Can I take a sick day?

Can I get time off work to get my COVID vaccine?

Can I take sick leave if I feel unwell afterwards?

What if I’m a casual employee or an independent contractor?

What if I work in retail or hospitality?

What other options are there?

Frydenberg spends the budget bounty to drive unemployment down to new lows

Exploitation in the Digital Economy

As boundaries between work and home vanish, employees need a ‘right to disconnect’

Availability creep

Health implications

Disconnecting in Australia and internationally

The French example

What’s next for Australia?

What needs to happen now

Budget aims at unemployment with a ‘4’ in front of it

JobKeeper and JobMaker have left too many young people on the dole queue

Shut out of JobKeeper

Drawing down superannuation

More work needed

The successor to JobKeeper can’t do its job. There’s an urgent need for JobMaker II

Billions on offer, little takeup

JobMaker II could save 100,000 jobs

But it should be announced this week

What happens when you free unemployed Australians from ‘mutual obligations’ and boost their benefits? We just found out

Top economists want JobSeeker boosted by $100+ per week and tied to wages

A scant incentive to shirk

Wages determine living standards

Sharing my thoughts with the world from a Particular Baptist perspective

Total hours worked

Slow wages growth

Edging closer to where we need to be

Reigniting an immigration debate

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Can I get time off work to get my COVID vaccine?

Can I take sick leave if I feel unwell afterwards?

What if I’m a casual employee or an independent contractor?

What if I work in retail or hospitality?

What other options are there?

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Availability creep

Health implications

Disconnecting in Australia and internationally

The French example

What’s next for Australia?

What needs to happen now

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Shut out of JobKeeper

Drawing down superannuation

More work needed

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Billions on offer, little takeup

JobMaker II could save 100,000 jobs

But it should be announced this week

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A scant incentive to shirk

Wages determine living standards

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