It turns out that the policies for under 30s in the federal budget in May were a precursor to a much wider set of changes affecting unemployed people across the board. These are just now coming to light. While people aged 30 and over won’t have to face a potential six-month wait to receive payments, nevertheless the Newstart unemployment payment is to become a much more conditional payment, with a considerably tougher set of eligibility requirements.
As a reminder, the full payment for a single person for Newstart Allowance is $255.25 a week. The rate of payment has been widely criticised as inadequate by many groups including the OECD and the Business Council of Australia, which makes the point that its low level is actually a barrier to effective job searches and employment.
Nevertheless, the government is proposing to make sure recipients “earn” every cent of this payment through an expanded “work for the dole” program for recipients up to the age of 49. People aged 50-60 will be required to undertake an “approved activity” under “mutual obligation”. Another new obligation is that people receiving Newstart will have to apply for around 10 jobs a week or 40 a month, roughly double the current requirement.
In fairness, the government is also saying that it will improve the employment services system to help people in their work search endeavours. This has been a theme for as long as I can remember in government efforts to increase employment services outcomes since the mid-1980s. But, however “effective and efficient” the service provider can be made, receiving a Newstart Allowance will be a singularly tough gig for anyone unfortunate enough to lose a job, or to be looking for a job after finishing a stint in education and training.
Greater “work for the dole” and work search requirements also have far-reaching implications for employers and organisations who host “work for the dole” programs.
More applications does not make more jobs
The overall unemployment rate is now 6%, and 13.5% for 15-24 year olds. In May there were 146,000 job vacancies with 720,000 people unemployed. Another 920,000 were underemployed and wanting more hours of work. Underemployment is a very important labour market indicator as, under the terms of internationally agreed labour statistics collection, an individual is counted as employed if working one hour a week for pay or profit.
Altogether, these figures mean 1.64 million people who have no work or not enough work are potentially competing for available job vacancies.
While the labour force underutilisation rate of 13.5% suggests that there are around 10 potential job applicants for each vacancy, we need to consider that some sectors of employment will have very large pools of applicants. This applies especially to those jobs with broader skills requirements.
This is the core reality of the Australian job market. The intensification of job search requirements means people receiving Newstart will be coerced into applying for many jobs that they have very little chance of obtaining.
No one suggests that they shouldn’t be doing what they can to find a job, but futile applications for jobs serve no purpose but to tick the boxes to receive a payment. It is an immense strain on the unemployed person – as if being unemployed and living on Newstart isn’t hard enough.
The government might also consider the burden it imposes on employers and employment service providers. Many employers will be inundated with unsuitable applicants. We might speculate that they will be less inclined to advertise positions attracting hundreds of applicants, perhaps opting for more informal means of recruitment.
At the same time, employment service providers will be tasked with pushing unemployed people into inappropriate job search efforts.
A further consideration is how “work for the dole” is to be expanded. Having worked in a number of NGOs, I am well aware that it is no simple task to take on a “volunteer” in terms of supervision and support; even more so someone who is mandated to do unpaid work so that they have some income to live on. It is an invidious and very unpleasant scenario for the type of organisations that the government wishes to impose on for “work for the dole” places.
And as economist Jeff Borland has pointed out in The Conversation, the outcomes of “work for the dole” program are very weak and largely a waste of time.
The question then must be asked: what is the government trying to achieve? Certainly, the outcome of its new policies for under 30s and the imminent policies for anyone on Newstart will be more stigmatisation for being unemployed, and more deterrence to making claims for payments.
Perhaps, there are some other motives related to long-term reduction in minimum wages, with more people prepared to work under the counter just to survive, as suggested in a thoughtful article by Fiona Scott-Norman in The Big Issue (July 4-17).
The final word on being unemployed
It’s worth recalling that it is very hard now being unemployed and in receipt of Newstart. I will let a woman in her early 50s who I interviewed for my doctoral research have the final word:
On Newstart there is constant pressure. Most of my time [is] taken up with job searching. In this time (three years) I have applied for over 600 jobs with a rate of one interview for every ten jobs I applied for. And out of these, resulted in two jobs … but only lasted the extent of probation. I found myself underperforming due to depression and lack of confidence.
By the way, she had a university degree and had worked many years in the public sector.