Modern Australian


There's serious talk about a "job guarantee", but it's not that straightforward

  • Written by Peter Davidson, Adjunct Senior Lecturer, UNSW

Suddenly, the idea of a “job guarantee” is back in vogue.

Lawyer, academic, land rights activist and founder of the Cape York Institute Noel Pearson has come out of it favour of it, University of Newcastle labour market specialist Bill Mitchell has a document before the prime minister, and the Per Capita think tank is pushing for a youth-only guarantee.

The idea is that the government would make an unconditional job offer at a minimum wage to anyone willing and able to work. There would be no need for the Newstart unemployment benefit (now called JobSeeker).

Read more: Forget JobSeeker. In our post-COVID economy, Australia needs a 'liveable income guarantee' instead

The buffer of jobs on offer would “normally be small and would shrink as private sector activity recovers”.

It is not widely known that it’s been tried before, by the Keating government in 1994. The scheme was limited to the long-term unemployed, making it more manageable than a scheme that offered employment to everyone who was unemployed.

Working Nation

The centrepiece of Working Nation, unveiled by Prime Minister Paul Keating in February 1994, the so-called “Job Compact” guaranteed subsidised employment for six to 12 months to everyone who had been unemployed for more than 18 months.

This article draws on my research into what happened, including interviews with senior government officials from that time.

By late 1993 300,000 people had been reliant on unemployment payments for more than 12 months.

The idea was that paid work experience in regular jobs would improve their chances of securing unsubsidised jobs by renewing their confidence and skills, and instilling confidence in employers about their ability to work.

We started off wanting to guarantee the long-term unemployed a job. We thought that’s what this agenda was all about (official, department of prime minister and cabinet)

The original plan was for most of the job placements (70%) to be offered through a private sector wage subsidy scheme, Jobstart, which had a good record for placing people in ongoing jobs.

There's serious talk about a "job guarantee", but it's not that straightforward Even with payment, employers weren’t keen to take on subsidised applicants.

The other jobs would be provided through the New Work Opportunities program (which offered community organisations a 100% wage subsidy to employ people fulltime for six months) and Jobskills (which offered a combination of part time paid employment and training run by community organisations).

When fewer private employers than expected took on Jobstart wage subsidies (134,000 in 1995) the job guarantee could only be fulfilled by expanding public and community sector jobs (to 123,000 positions).

As has been the case in other overseas public sector job creation schemes, these jobs often turned out to be very different to mainstream jobs, reducing transitions to unsubsidised jobs.

And as the number of subsidised jobs ballooned, their quality declined. And instead of case managers matching jobs and experience to needs, the process became a conveyor belt.

There was some dissatisfaction even within the department of prime minister and cabinet about how it was going. It appeared to be going the [old] way of not treating people as individuals, just putting people into any program that was coming along (official, department of prime minister and cabinet)

And the language of the program became increasingly punitive.

You often start with a great idea and later it gets modified. Focus groups showed the public were really down on the unemployed and sole parents. That got reflected back in the ‘reciprocal obligation’ language, which was not how we originally had it (official, department of prime minister and cabinet)

Only one third of the participants were in unsubsidised jobs three months after the subsidies ended. The official evaluation of the “net impact” of the program (the extent to which it increased the probability of employment) was a 28% improvement from Jobstart, 11% for Jobskills and 4% for New Work Opportunities.

‘High cost, low outcomes’

The Job Compact was expected to reduce the number of people on unemployment benefits for more than 18 months by 50% in its first year, but the actual decline was less than 20%.

The official evaluation pointed to its “high cost and low outcomes”, and concluded it was “not the most appropriate strategy for assisting the long-term unemployed”.

It said subsidised public sector jobs should be created only to help “the most disadvantaged clients who may not meet the job readiness requirements of many private employers”.

Read more: When the Coronavirus Supplement stops, JobSeeker needs to increase by $185 a week

Right now, 700,000 people have been on unemployment benefits for more than a year, making the case for some sort of large-scale investment in paid work experience and training strong.

Subsidised jobs can help reduce long-term unemployment, as shown by the success of the Future Jobs Fund in the Britain and small-scale wage subsidy schemes in Australia.

Britain’s Conservative Government has just announced plans to generate 350,000 subsidised community jobs for unemployed young people.

But Australia’s experience with the Job Compact shows guarantees are no panacea.

Subsidised jobs help, but they’re no panacea

When subsidised jobs schemes are scaled up to offer jobs to everyone who is unemployed, their costs increase and their quality and their impact on future employability diminish.

We will need large-scale programs to create jobs, and we should offer the 700,000 people who are already long-term unemployed all the help they need to secure them.

But that needn’t always mean subsidised jobs. Many who are unemployed will benefit from training, others from their employment service provider partnering with an employer to skill them up.

Higher unemployment is a price we’ve paid to control the virus. It will take a mix of measures to ensure that cost is only temporary.

Authors: Peter Davidson, Adjunct Senior Lecturer, UNSW

Read more https://theconversation.com/theres-serious-talk-about-a-job-guarantee-but-its-not-that-straightforward-140632

NEWS

Reserve Bank no longer confident of quick bounce out of recession

Olga Kashubin/ShutterstockThe good news in the Reserve Bank’s latest quarterly set of forecasts is that the recession won’t be as steep as it thought last time.The bad news is it...

At moments like these, we need a cultural policy

Stephanie Lake's dancework Colossus.Yaya StemplerNational crises, like the pandemics that can provoke them, come in stages. Each stage presents leaders with unique problems that require mental, moral and emotional agility...

No, the extra hygiene precautions we're taking for COVID-19 won't weaken our immune systems

ShutterstockDuring the COVID-19 pandemic we’re constantly being reminded to practise good hygiene by frequently washing our hands and regularly cleaning the spaces where we live and work.These practices aim to...

Michelle Grattan on Melbourne's stage four lockdown, Morrison's cyber security package, and paid pandemic leave

University of Canberra Professorial Fellow Michelle Grattan and University of Canberra Assistant Professor Caroline Fisher discuss the week in politics.This week Michelle and Caroline discuss the closure of ‘non-essential’ businesses...

In The Meddler, we join a creeping nightcrawler as he chronicles death

MIFFReview: The Meddler, screening at the Melbourne International Film FestivalFor movie scholars and enthusiasts, one of the worst things about the COVID-19 pandemic has been the shutting down of cinemas...

Concetta Fierravanti-Wells on aged care – what needs to be done differently

The Royal Commission into Aged-Care Quality and Safety delivered it’s interim report in October 2019. Titled ‘Neglect’, it provided a scathing insight into the aged care industry - finding it...

cash for cyberpolice and training, but the cyberdevil is in the cyberdetail

Australia’s long-awaited cybersecurity strategy, released yesterday, pledges to spend A$1.67 billion over the next ten years to improve online protection for businesses, individuals and the country as a whole.The lion’s...

How the 'National Cabinet of Whores' is leading Australia's coronavirus response for sex workers

Tim Wimborne/AAPThis article has links that contain graphic contentMany industries and employees have been hurt by COVID-19. But sex workers, who face stigma and discrimination at the best of times...

We can’t let STEM skills become a casualty of COVID-19

Universities and other research organisations in Australia have been hit hard by the COVID-19 pandemic.In May, a group led by Australia’s Chief Scientist Alan Finkel forecasted severe impacts for our...

How to keep your contact lenses clean (and what can go wrong if you don't)

ShutterstockYou’re rushing and accidentally drop a contact lens on the bathroom floor. Should you:a) run it under the tap and pop it in?b) spit on it and do the same?c)...

why so little is known about the reasons people go missing

ShutterstockAs part of new research into missing persons in Australia, I have been asking people who return after disappearing what they needed or wanted. Mary, who has gone missing four...

has Donald Trump broken satire?

For a long time, the answer has been yes. When Saturday Night Live, John Oliver and the satirical establishment railed at him, the president’s supporters were only strengthened in their...

Popular articles from Modern Australian

How to supercharge your immune system for cold and flu seasonHow to Avoid Blocked Drains and Stinky OverflowCBD on Cyber Monday: Buying the Best for You5 Beginner Projects You Can Make with Arduino Starter KitWhy Your Outdoor Living Areas Might Benefit From TilesRetirement on the Road: Planning a Post-Retirement Australian Road TripDesign a Pool to Fit Your SpaceHow to Get TEFL Certification for Teaching English in ThailandHow to Find a Lawyer in Sydney for Your Legal RepresentationHow to Pre-Prepare For Your Retirement3 of the most common beginner’s mistakes in table tennisTips to Choose Regular Wear Bands for Your Brand New Apple WatchThe Benefits of Living a Healthy LifestyleHOW TO STUDY ART WITH WIKIART.ORGHow to transform a