Closing the gap on Indigenous employment? Not quite

Indigenous Affairs Minister Jenny Macklin and Indigenous Health Minister Warren Snowdon discuss the Closing The Gap report in June. AAP/ Penny Bradfield

It almost goes without saying, but stable, well-paid employment remains one of the key ways to protect people from poverty and exclusion. And that’s never truer than for our Indigenous population.

Aside from having the higher income and resources that come with employment, the households of Indigenous Australians who are employed have significantly higher levels of educational attendance than those who live in households where no one is employed.

It is not surprising, then, that reducing the disparity between Indigenous and non-Indigenous Australians in employment outcomes is one of the pillars of the Australian government’s Closing the Gap agenda. By 2018, COAG has committed to halving the gap between Indigenous and non-Indigenous Australians in the proportion of the working age population who were employed.

According to the 2006 Census, there were around 122,000 Indigenous Australians aged 15 to 64 years who were identified as being employed. 2011 Census data has just been released showing that number has risen to around 146,000.

While the increase in the number of Indigenous people counted as being employed is a positive development, it needs to be recognised that the overall Indigenous population also grew substantially over the period.

Looking at employment percentages as opposed to absolute numbers, the story is less positive. In 2006, 48% of Indigenous Australians aged 15-64 were employed. By 2011, this had actually declined to 46.2%. Indigenous employment outcomes have not gotten better since the Closing the Gap targets were announced, but in percentage terms have in fact gotten worse.

As employment outcomes for the non-Indigenous population stayed relatively stable, the gap in outcomes between Indigenous and non-Indigenous Australians actually widened.

The drop in Indigenous employment between 2006 and 2011 was driven mainly by deterioration in Indigenous male employment. In 2006, 53% per cent of Indigenous males aged 15 to 64 years were employed. By 2011, this had fallen to 49.7 per cent.

This worsening occurred mainly at the younger end of the age range with the following figure showing the difference in Indigenous employment outcomes between 2006 and 2011 by age.

Change in Indigenous employment outcomes by age – 2006 to 2011. 2006 and 2011 censuses

While the percentage of men and women 55 years and older who were employed increased substantially over the period, there were dramatic declines in those younger than 25 in general and men under 25 in particular.

Not only did the change in Indigenous employment have a gender and age dimension, it also differed considerably by jurisdiction. This is demonstrated in the following figure which shows the change in Indigenous employment separately for the eight Australian states and territories.

Change in Indigenous employment outcomes by State/Territory – 2006 to 2011. 2006 and 2011 Censuses

For both men and women, employment outcomes deteriorated considerably for the Indigenous population between 2006 and 2011 in Queensland, South Australia and Western Australia. Outcomes also worsened for men in the Northern Territory. In the jurisdictions in which the Indigenous population tended to live in more urban areas (New South Wales, Victoria and the ACT), employment either stayed steady or improved slightly.

It will take considerable analysis and research to understand further what caused the deterioration in Indigenous employment between 2006 and 2011. However, at this early stage we can speculate about a few of the possible drivers of change.

First, the global financial crisis. The 2006 census occurred at a time of very favourable economic conditions with widespread talk of labour market shortages. Although Australia wasn’t affected anywhere near as much as other countries, it may have been the case that certain segments of the labour market (such as Indigenous Australians) were more affected than others.

Second, the Community Development and Employment Projects (CDEP) scheme. In essence, the program allowed Indigenous Australians in certain areas to forego social security benefits and instead receive a form of wages for employment. At the time of the 2006 Census, the CDEP Scheme made up a substantial component of the Indigenous labour market at close to 35,000 jobs. Since then, there has been a dramatic reduction in CDEP numbers (down to a little under 11,000) with many people moved on to Newstart allowance.

There is some evidence that some of those who were moved off CDEP found other jobs. For example, the number of Indigenous Australians between 15 to 64 years old who were employed in full-time private sector employment increased from around 47,500 in 2006 to around 63,900 in 2011. This was a much faster rate of growth than for the working age population as a whole showing that a greater proportion of Indigenous Australians are working in the types of jobs that are likely to be well remunerated. Nonetheless, this growth in full-time private sector employment has not matched the decline in CDEP employment.

It is clear that changes to the CDEP scheme have made the job of achieving employment equity much more difficult. It has also put considerable pressure on governments and businesses to help create a significant number of jobs for Indigenous Australians over the next six to seven years. If this does not occur, government targets are unlikely to be met and, more importantly, the skills and talents of many Indigenous Australians will continue to be underutilised.

A longer version of this article appeared on Nicholas’ blog, The Number Cruncher.