tag:theconversation.com,2011:/us/topics/long-term-unemployment-73259/articleslong-term unemployment – The Conversation2023-11-23T16:16:04Ztag:theconversation.com,2011:article/2180762023-11-23T16:16:04Z2023-11-23T16:16:04ZWhat the UK government’s back to work plan covers – and why it is unlikely to boost people’s job prospects<p>Ahead of the UK government’s <a href="https://theconversation.com/autumn-statement-as-it-happened-218211">latest economic statement</a>, the chancellor, Jeremy Hunt, and the secretary of state for work and pensions, Mel Stride, unveiled a new employment support package dubbed the <a href="https://www.gov.uk/government/news/employment-support-launched-for-over-a-million-people">back to work plan</a>. </p>
<p>The government’s aim is to support more than 1 million people who are either long-term unemployed or have long-term health conditions to (re)enter the workforce or remain in employment. The measures include providing additional individual support, particularly for those with health conditions, as well as revised benefit conditions and sanctions.</p>
<p>The rate of unemployment for 16- to 64-year-olds in the UK is 4.4%. While slightly higher than pre-pandemic levels, it remains, by historic standards, comparatively low. </p>
<p>But rates of what economists term “economic inactivity” have followed a different trend. Economic inactivity refers to people who are neither working nor actively looking for work. This can be due to retirement, studying, having caring responsibilities or <a href="https://journals.sagepub.com/doi/10.1068/c0851">long-term ill-health</a>. </p>
<p>In recent years, the number of people reporting to be out of work because of health issues has risen significantly. In the period May-July 2019, the Office for National Statistics reported that 2,048,000 16- to 64-year-olds were economically inactive for long-term health reasons. The pandemic has seen that figure rise by more than <a href="https://www.ons.gov.uk/employmentandlabourmarket/peoplenotinwork/economicinactivity/timeseries/lf69/lms">half a million</a> to reach 2.6 million.</p>
<p>In terms of job availability, the UK currently counts <a href="https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/jobsandvacanciesintheuk/november2023">957,000</a> vacancies across the economy. This is around 150,000 more than before COVID. </p>
<h2>What is in the back to work plan?</h2>
<p>The plan focuses on both health- and unemployment-related support by boosting four existing programmes. </p>
<p>The mental health treatment initiative NHS Talking Therapies is now set to be accessed by an additional 384,000 people, and the Individual Placement and Support programme, which is integrated in community mental health services, by an extra 100,000 people. </p>
<p>Restart, the long-term unemployment scheme for Universal Credit claimants, will be extended in England and Wales for two years and the intervention timeframe brought forward. People will now receive support from Restart after six months of being on Universal Credit, rather than nine months. In addition, extra Jobcentre support has been announced for England and Scotland.</p>
<p>The number of people to be supported under the Universal Support programme is set to increase to 100,000 (from 50,000). Participants will benefit from 12 months of personalised assistance, a dedicated keyworker, and up to £4,000 of funding for training and health-condition management. </p>
<p>The back to work plan also formally launches the new WorkWell programme, which will be piloted in 15 areas across England. Here, the aim is to help 60,000 long-term sick or disabled people find work. </p>
<p>Perhaps the most controversial changes are those relating to the medical assessment system for disability benefit claims, a system which the government has targeted for <a href="https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1142474/transforming-support-health-and-disability-white-paper-cp807.pdf">long-term reform</a>. From 2025, the Work Capability Assessment (used to determine the severity of health limitations for employment purposes) will change with the aim of reducing the number of claims for “limited capability for work and work-related activity” – if successful, these qualify for a higher benefit rate. </p>
<p>But the <a href="https://obr.uk/docs/dlm_uploads/E03004355_November-Economic-and-Fiscal-Outlook_Web-Accessible.pdf">Office for Budget Responsibility</a> (OBR) forecasts that changing the Work Capability Assessment will reduce the more severe incapacity caseload by 371,000, while increasing the less severe incapacity caseload by 342,000. In total, the OBR says changes to the assessment system will only increase employment by around 10,000 by 2028-29. </p>
<p>The plan also introduces additional levels of conditionality and sanctions, including additional contact with the Jobcentre for some Universal Credit claimants, mandatory work placement trials, and a review for those people who remain unemployed after going through Restart. This review might trigger additional work-search conditions – if the claimant does not adhere to them, they could see their claim denied altogether. </p>
<p>The plan further specifies stricter sanctions for those considered to be “disengaged” – people, for example, who do not attend multiple successive Jobcentre appointments. Potential sanctions here include closing benefit claims and withholding additional support, such as free prescriptions and legal aid.</p>
<h2>What impact will the plan have?</h2>
<p>Extending the provision of services and linking health and employment within the support that is offered to job seekers are positive steps. <a href="https://learningandwork.org.uk/wp-content/uploads/2020/04/WWU-Evidence-review-Employment-support-for-people-with-disabilities-and-health-conditions.pdf">Research shows</a> that specialist provision can play an important role in helping people with health conditions to remain in work, or return to employment. </p>
<p>However, these measures are likely to have a relatively limited impact on the labour market in the short term. The OBR estimates that, by 2028-29, the combined effect of all the welfare measures in the autumn statement, including those in the back to work plan, will raise employment by just <a href="https://obr.uk/docs/dlm_uploads/E03004355_November-Economic-and-Fiscal-Outlook_Web-Accessible.pdf">50,000</a>. </p>
<p>There are other measures the government needs to take, including tackling long waiting times for hospital treatment. Ill-health <em>within</em> the workforce has also increased over the past decade, from 2.3 million people reporting a work-limiting health condition to <a href="https://www.health.org.uk/publications/long-reads/what-we-know-about-the-uk-s-working-age-health-challenge">3.7 million</a>. This shows that the UK needs a much more comprehensive and ambitious approach to work and health over the long term.</p>
<p>What’s more, the punitive measures appear less helpful in addressing current labour market issues. Research <a href="https://www.cambridge.org/core/journals/journal-of-social-policy/article/impacts-of-benefit-sanctions-a-scoping-review-of-the-quantitative-research-evidence/9272BC857236795930DCD6AB7B8E04A1">shows</a> that although sanctions may have small positive effects on rates of people getting jobs, the quality of these jobs tends to be lower. Sanctions also increase financial hardship. </p>
<p>The government’s rhetoric around the plan, such as references to people “taking taxpayers for a ride”, as Stride <a href="https://www.gov.uk/government/news/employment-support-launched-for-over-a-million-people">has put it</a>, also appears counterproductive. It is more likely to alienate <a href="https://learningandwork.org.uk/wp-content/uploads/2023/11/Understanding_benefits_report_2023-1.pdf">the very people</a> the plan’s support mechanisms purport to engage by stigmatising back to work support. </p>
<p>Research on ill-health and work shows how important it is for people to get individualised and integrated support. In this respect, many of the announcements in the plan are positive developments. However, they are relatively modest in terms of the scale of the issue. More broadly, the likely impact of the plan is that it will limit benefit access more than it improves people’s employment prospects.</p><img src="https://counter.theconversation.com/content/218076/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Paul Sissons receives funding from The Nuffield Foundation. </span></em></p>With stricter conditionality and sanctions, the new plan looks set to limit people’s access to benefits more than it improves their hopes of getting a jobPaul Sissons, Professor of Regional Economic Development and Policy, Keele UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1628792021-06-17T04:06:53Z2021-06-17T04:06:53ZEnding furlough will hit older workers hard – here’s how to soften the blow<figure><img src="https://images.theconversation.com/files/406736/original/file-20210616-3759-th4u3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Older workers are far more affected than people in middle age. </span> <span class="attribution"><a class="source" href="https://unsplash.com/photos/cbYynhAOsJQ">KE Atlas/Unsplash</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>UK employers affected by the pandemic have been able to put their employees on furlough thanks to the <a href="https://www.gov.uk/government/collections/coronavirus-job-retention-scheme">coronavirus job retention scheme</a>, with the government covering 80% of their monthly wages up to £2,500. The furlough scheme is set to wind down <a href="https://www.gov.uk/government/publications/changes-to-the-coronavirus-job-retention-scheme/changes-to-the-coronavirus-job-retention-scheme">in July</a> (with higher employer contributions required), despite the <a href="https://www.standard.co.uk/news/uk/boris-johnson-freedom-day-delay-four-weeks-covid-lockdown-easing-july-19th-b940564.html">recently announced delay</a> to the lifting of all lockdown restrictions. It has also <a href="https://www.theguardian.com/uk-news/2021/jun/14/rishi-sunak-rejects-calls-by-businesses-for-furlough-extension-covid">been reported</a> that the Treasury is not intending to extend the scheme beyond the end of September.</p>
<p>Workers under the age of 25 are the most common users of the scheme, since they make up <a href="https://ifs.org.uk/publications/14791">much of</a> the workforce in industries like hospitality and travel where normal business has been impossible. However, an often ignored fact is that older workers have been worse affected by the pandemic than middle-aged workers. </p>
<p>In late April, workers over the age of 65 were <a href="https://www.gov.uk/government/statistics/coronavirus-job-retention-scheme-statistics-3-june-2021/coronavirus-job-retention-scheme-statistics-3-june-2021">40% more likely</a> to be furloughed than workers in their 40s. <a href="https://www.gov.uk/government/statistics/coronavirus-job-retention-scheme-statistics-3-june-2021/coronavirus-job-retention-scheme-statistics-3-june-2021">The number</a> of furloughed workers over the age of 50 is 977,300, compared to 969,700 furloughed workers below the age 30.</p>
<p>Unemployment is <a href="https://commonslibrary.parliament.uk/the-furlough-scheme-one-year-on/">expected to</a> rise as the scheme comes to an end, since some firms will not be able to retain their workers. Some older workers may retire early as a result, but leaving the labour market may not be an option for those lacking the financial resources – especially if they also still have several years before reaching the current <a href="https://www.gov.uk/state-pension-age">state pension age</a> of 66. </p>
<p>So how will these older workers who become unemployed at the end of the furlough scheme fare compared to their younger counterparts?</p>
<h2>Older workers and employment</h2>
<p>We can start by looking at pre-pandemic patterns of work among workers aged 50 to 69, as shown in a <a href="https://ifs.org.uk/publications/15485">new report</a> by the Institute for Fiscal Studies (of which I am a co-author), funded by the <a href="https://www.ageing-better.org.uk/">Centre for Ageing Better</a>.</p>
<p>The report finds that older workers are less likely to find work after spells of unemployment compared to younger workers. Less than a third of unemployed older jobseekers are working a year later, compared to about half for the younger age groups (as shown in the graph below). This is even more true for those in long-term unemployment. Meanwhile, certain types of older workers are even less likely to find work after unemployment – in particular, women and those with no educational qualifications.</p>
<p><strong>Share of unemployed getting hired over the course of a year, by age</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/406718/original/file-20210616-3844-12yjprk.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Graph showing share of unemployed people moving into employment over the course of a year (desribed above)." src="https://images.theconversation.com/files/406718/original/file-20210616-3844-12yjprk.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/406718/original/file-20210616-3844-12yjprk.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=331&fit=crop&dpr=1 600w, https://images.theconversation.com/files/406718/original/file-20210616-3844-12yjprk.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=331&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/406718/original/file-20210616-3844-12yjprk.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=331&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/406718/original/file-20210616-3844-12yjprk.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=415&fit=crop&dpr=1 754w, https://images.theconversation.com/files/406718/original/file-20210616-3844-12yjprk.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=415&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/406718/original/file-20210616-3844-12yjprk.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=415&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Source: authors’ calculations based on the Labour Force Survey.</span>
<span class="attribution"><a class="source" href="https://ifs.org.uk/publications/15485">IFS</a></span>
</figcaption>
</figure>
<p>But why is finding work more difficult for older jobseekers than younger ones? Certain characteristics of older workers may help explain this: older workers have on average spent a much longer time in the same job than younger workers. For example, over two-thirds of workers in their mid-50s have been working with the same employer for at least five years. Such people have less recent experience in looking for work, and may have built up a large amount of firm-specific experience that may not be easily transferable to new jobs.</p>
<p>Older workers are also much less likely to switch employer, industry or occupation compared to younger workers. This suggests that older workers may face more obstacles when it comes to moving between jobs, or they may just prefer to stay in the same job for longer than younger adults. </p>
<h2>The COVID effect</h2>
<p>The COVID-19 crisis might exacerbate the difficulties older jobseekers are facing, for several reasons. Finding work is particularly difficult for workers who have been unemployed for longer. For example, older workers who have already been out of work for six to 12 months are 17 percentage points less likely to be in work one year later compared to an older worker who has been out of work for less than six months, all else equal. </p>
<p>While furlough has maintained the connection between a firm and an employee, if they cannot return to work after furlough, the long periods spent outside the labour market may have a similar effect on their re-employment opportunities as long-term unemployment. In particular, the lack of keeping up and building on skills at work can be detrimental.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/406737/original/file-20210616-3785-1sen02a.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Man in a waistcoat and shirt outside an office, looking over a barrier" src="https://images.theconversation.com/files/406737/original/file-20210616-3785-1sen02a.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/406737/original/file-20210616-3785-1sen02a.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=900&fit=crop&dpr=1 600w, https://images.theconversation.com/files/406737/original/file-20210616-3785-1sen02a.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=900&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/406737/original/file-20210616-3785-1sen02a.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=900&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/406737/original/file-20210616-3785-1sen02a.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1131&fit=crop&dpr=1 754w, https://images.theconversation.com/files/406737/original/file-20210616-3785-1sen02a.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1131&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/406737/original/file-20210616-3785-1sen02a.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1131&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Retraining will not be easy for many.</span>
<span class="attribution"><a class="source" href="https://unsplash.com/photos/LPvloZJu1Pk">Tyler Nix/Unsplash</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<p>At the same time, the pandemic is likely to permanently affect industries such as hospitality, travel and retail. Some older workers may have to consider changing industry or occupation, which can be difficult. In particular, those with fewer years left in the labour market may see the returns from retraining as too low to justify the effort.</p>
<p>To help older workers who are made redundant after the furlough scheme is wound up, the government should consider supporting them – especially the more vulnerable ones, such as those with little or no formal qualifications. <a href="https://www.ageing-better.org.uk/sites/default/files/2019-06/Employment-support-over-50s.pdf">Previous research</a> finds that the current forms of employment support are not working as well for people over the age of 50, so more targeted support could be beneficial. Help for those looking to switch industry or occupation should also be available, and some of this should be specifically aimed at older workers. </p>
<p>With workers having to wait until they are 66 to receive a state pension, it is important for many older people’s financial security that they are able to find new work in the coming months.</p><img src="https://counter.theconversation.com/content/162879/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Heidi Karjalainen is writing as part of an ongoing programme of research funded by the Centre for Ageing Better. The Labour Force Survey (LFS) data are Crown Copyright and are reproduced with the permission of the Controller of HMSO and the Queen’s Printer for Scotland. The LFS is produced by the Office for National Statistics and accessed through the ONS’s Secure Research Service. The use of the ONS statistical data in this work does not imply the endorsement of the ONS in relation to the interpretation or analysis of the statistical data.</span></em></p>While it is well known that under-25s are most likely to bear the brunt of job losses when furlough ends, older workers are vulnerable too.Heidi Karjalainen, Research Economist, Pensions and Public Finance, Institute for Fiscal StudiesLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1473822020-11-06T19:14:59Z2020-11-06T19:14:59ZJob policies that offer generous unemployment benefits create more happiness – for everyone<figure><img src="https://images.theconversation.com/files/367974/original/file-20201106-13-1b5ee36.jpg?ixlib=rb-1.1.0&rect=22%2C49%2C2980%2C1891&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Turn that frown upside down.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/happy-sad-royalty-free-image/91048634">shaunl/iStock via Getty Images</a></span></figcaption></figure><p>Losing one’s job undoubtedly makes someone less happy, a feeling <a href="https://news.un.org/en/story/2020/06/1067432">tens of millions of people around the world are experiencing</a> right now. Even as the labor market recovers, as we saw in the <a href="https://www.bls.gov/news.release/empsit.nr0.htm">latest U.S. employment report</a> on Nov. 6, the number of people who have been without a job for more than 26 weeks <a href="https://www.nytimes.com/live/2020/11/06/business/us-economy-coronavirus">continues to increase</a>. </p>
<p>Governments <a href="https://www.ilo.org/global/topics/coronavirus/regional-country/country-responses/lang--en/index.htm">have implemented a wide variety of labor market policies</a> to address the pandemic’s impact, from beefing up funding of existing unemployment policies to supplemental income programs like the <a href="https://www.nytimes.com/2020/07/29/business/economy/unemployment-benefits-coronavirus.html">US$600 checks that the U.S. sent out</a> during part of the pandemic. </p>
<p>While these policies are intended to alleviate the economic pain of losing one’s job, we, as <a href="https://www.minerva.kgi.edu/people/robson-morgan-phd-assistant-professor-social-sciences/">happiness</a> <a href="https://statistiques.public.lu/en/actors/statec/organisation/red/OConnor/index.html">researchers</a>, are more interested in how they might affect people’s well-being during the pandemic. </p>
<p>Broadly speaking, do some types of labor policies result in more happiness than others? </p>
<h2>Measuring happiness</h2>
<p>The answer to this question relies on the <a href="https://ggsc.berkeley.edu/what_we_do/event/the_science_of_happiness">science of happiness</a>, a burgeoning new area of social science research.</p>
<p>Social scientists like us use statistical methods to analyze data collected in surveys that ask people to report their level of happiness based on how they feel their life is going. This allows us to better understand the causes and consequences of happiness. </p>
<p>Perhaps the most well-known results of all this work are the global happiness rankings that come out each year, through which people have learned <a href="https://worldhappiness.report/ed/2020/social-environments-for-world-happiness/">how wonderful life is in Scandinavia</a>. Indeed more and <a href="https://www.happinesscouncil.org">more countries and organizations</a> are <a href="https://issuu.com/behavioralsciencepolicyassociation/docs/policy_insights_from_the_new_science_of_well-being">measuring happiness</a> and tweaking policies as a result.</p>
<p>While economic indicators such as unemployment and gross domestic product paint a <a href="https://news.uchicago.edu/story/happiness-among-americans-dips-five-decade-low">bleak picture of life</a> right now, the loss in happiness is likely even larger than implied by growth and jobs data because these indicators fail to capture psychological costs. Even those who are not sick or unemployed <a href="https://jamanetwork.com/journals/jamainternalmedicine/fullarticle/2771502">face significant distress</a> as a result of pandemic-related fears or social isolation. </p>
<p><a href="https://doi.org/10.1162/003465303772815745">Research shows</a> <a href="https://doi.org/10.7758/RSF.2017.3.3.04">these factors</a> <a href="https://onlinelibrary.wiley.com/doi/full/10.1111/roiw.12369">are detrimental</a> for <a href="https://doi.org/10.1142/9789814417358_0006">feelings of well-being</a>. </p>
<p>While worrying about happiness may seem trivial when <a href="https://www.nytimes.com/interactive/2020/world/coronavirus-maps.html">so many people have died</a>, deteriorating well-being can create a <a href="https://ssrn.com/abstract=2306651">vicious cycle</a>. Fear, despair, depression and isolation trigger worse <a href="https://doi.org/10.1016/j.jebo.2019.10.018">health</a>, <a href="https://doi.org/10.1016/j.jebo.2003.09.002">economic</a> and <a href="https://doi.org/10.1111/roiw.12388">social</a> <a href="https://doi.org/10.1016/j.jebo.2019.03.024">outomes</a>, which in turn reinforce the negative feelings.</p>
<p>Such a cycle prolongs recovery and may ultimately lead to spiking suicide rates and deaths of despair. </p>
<p>So at a time of heightened stress and forced social isolation, finding ways to help people stay positive and healthy is extremely important. And based on <a href="https://statistiques.public.lu/catalogue-publications/economie-statistiques/2020/114-2020.pdf">our research</a>, we believe one way to do this is with the right labor market policy. </p>
<h2>Labor market bliss</h2>
<p>Relevant labor market policies can be loosely divided into three types. </p>
<p>The first provides support for people who become unemployed in the form of income replacement or training programs. An example of this is <a href="https://www.oecd.org/employment/emp/employmentdatabase-labourmarketpoliciesandinstitutions.htm">unemployment insurance</a>, which provides benefits to qualified workers when they lose their jobs. </p>
<p>The second type <a href="https://www.oecd-ilibrary.org//sites/1686c758-en/1/3/3/index.html?itemId=/content/publication/1686c758-en&_csp_=fc80786ea6a3a7b4628d3f05b1e2e5d7&itemIGO=oecd&itemContentType=book#">restricts the firing of employees</a>, a policy common in Europe that guarantees job security to some extent. Both of these policies are intended to buffer workers from individual shocks and deteriorating labor market conditions in a recession. </p>
<p>The third includes temporary measures enacted during <a href="https://www.oecd-ilibrary.org/sites/1686c758-en/1/3/1/index.html?itemId=/content/publication/1686c758-en&_csp_=fc80786ea6a3a7b4628d3f05b1e2e5d7&itemIGO=oecd&itemContentType=book">extraordinary times</a> such as furloughing employees: that is, keeping them in their jobs at reduced pay with assistance by governments. The <a href="https://www.theguardian.com/money/2020/may/12/how-the-uk-furlough-scheme-compares-with-other-countries">U.K. notably put this policy in place</a> early in the pandemic with the idea that it would allow economies to quickly recover from COVID-19 by essentially freezing the economy in place, after which people can quickly return to their jobs.</p>
<p>To get a better sense of how these labor market policies affect well-being, <a href="https://statistiques.public.lu/catalogue-publications/economie-statistiques/2020/114-2020.pdf">we studied</a> how happiness changed in 23 European countries in the aftermath of the Great Recession that resulted from the 2008-2009 financial crisis. </p>
<p>We found that countries that had more generous income replacement policies experienced smaller losses in happiness on average. Denmark and Ireland, for example, which experienced some of the smallest declines, both had generous income replacement and training programs for the unemployed. </p>
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<p>Greece, Italy and several other Mediterranean countries, on the other hand, which suffered some of the largest drops in happiness in the period, offered relatively little income support for the unemployed and had strict employment protection legislation.</p>
<p>Perhaps most surprising is that policies that explicitly protected employees – such as restrictions on layoffs – did not appear to do a very good job keeping people happy. For example, Greece and Italy relied on these types of policies to protect their workers yet nonetheless experienced high losses in happiness. </p>
<p>We believe the reason is that <a href="https://doi.org/10.1162/0033553042476215">these policies</a> make it harder to fire employees. That <a href="https://www.jstor.org/stable/4132669?seq=1">discourages hiring</a> in a recession because employers know they won’t be able to easily let go of the person if conditions deteriorate. So companies defer hiring, which makes it harder for people looking for a job to find one, and increases worries about becoming unemployed. Indeed, <a href="https://doi.org/10.1016/j.red.2012.02.001">previous research</a> indicates that high unemployment during recessions is due more to reductions in hiring than initial dismissals. </p>
<p>[<em><a href="https://theconversation.com/us/newsletters/the-daily-3?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=experts">Expertise in your inbox. Sign up for The Conversation’s newsletter and get expert takes on today’s news, every day.</a></em>]</p>
<h2>Supporting well-being</h2>
<p>So what does this tell us about the current situation? </p>
<p>Our research suggests restarting policies like the US$600 supplement the U.S. government offered the unemployed until the funding lapsed at the end of July is the optimal approach to supporting citizens’ well-being. Offering job training programs to help people find new jobs is another good strategy. </p>
<p>Policies that lock people into jobs, like the furlough approach taken in the U.K., may do more harm than good as they can limit the ability of companies to do the hiring necessary to make adjustments during this unprecedented situation. </p>
<p>This will increase worries about becoming unemployed, hurt people who become unemployed and potentially slow an economic recovery by limiting the ability of the labor market to adapt to a post-pandemic world.</p><img src="https://counter.theconversation.com/content/147382/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Kelsey O'Connor's organization received funding from the National Research Fund of Luxembourg for a project Kelsey O'Connor works on. He sits on the Board of Directors for the International Society for Quality-of-Life Studies and the Advisory Panel of the What Works Centre for Wellbeing. </span></em></p><p class="fine-print"><em><span>Robson Hiroshi Hatsukami Morgan does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Governments use a variety of labor market policies to support workers who lose their jobs – each with a different impact on a country’s well-being.Robson Hiroshi Hatsukami Morgan, Assistant Professor of Social Sciences, Minerva UniversityKelsey O'Connor, Researcher, National Institute for Statistics and Economic StudiesLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1490702020-10-29T19:07:37Z2020-10-29T19:07:37ZVital Signs: we’ll never cut unemployment to 0%, but less than 4% should be our goal<figure><img src="https://images.theconversation.com/files/366322/original/file-20201029-23-p0rs.jpg?ixlib=rb-1.1.0&rect=0%2C89%2C2434%2C1643&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>One of the most concerning things that happens in any recession is the spike in unemployment. The COVID-19-induced recession in Australia and around the world is no exception – other than perhaps the magnitudes involved.</p>
<p>Being out of work is distressing, even in advanced economies with a social safety net (like Australia). Welfare payments rarely, if ever, replace the full loss of income from employment.</p>
<p>In many countries, such as the US, unemployment benefits expire after a certain period of time. This puts the unemployed at risk of being destitute. In Australia (and other countries) receiving unemployment benefits requires proving you are actively looking for work. These obligations <a href="https://www.servicesaustralia.gov.au/individuals/services/centrelink/jobseeker-payment/what-your-commitments-are/mutual-obligation-requirements#whatrequirements">can be quite onerous</a>, even if well-intentioned.</p>
<p>Worse still, being unemployed can tilt the scales against an employer offering you a job. </p>
<p>As MIT and Harvard economists Robert Gibbons and Lawrence Katz noted in a <a href="https://www.nber.org/system/files/working_papers/w2968/w2968.pdf">landmark 1991 paper</a>, if employers have some discretion over whom to lay off – as is often the case – the labour market will rationally infer that laid-off workers are less desirable employees.</p>
<p>High unemployment also leads to what economists call “labour-market scarring”. This means all those starting work in a bad labour market can suffer long-term economic effects. Either because they don’t get on the job ladder as early as they would have, or because they start off in a job that doesn’t build their skills as well as would have been the case in a strong economy.</p>
<hr>
<p><strong>Rarely has Australia’s unemployment rate fallen below 5%</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/366353/original/file-20201029-13-1gsmn9y.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/366353/original/file-20201029-13-1gsmn9y.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/366353/original/file-20201029-13-1gsmn9y.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=247&fit=crop&dpr=1 600w, https://images.theconversation.com/files/366353/original/file-20201029-13-1gsmn9y.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=247&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/366353/original/file-20201029-13-1gsmn9y.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=247&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/366353/original/file-20201029-13-1gsmn9y.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=310&fit=crop&dpr=1 754w, https://images.theconversation.com/files/366353/original/file-20201029-13-1gsmn9y.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=310&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/366353/original/file-20201029-13-1gsmn9y.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=310&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Seasonally adjusted.</span>
<span class="attribution"><a class="source" href="https://www.abs.gov.au/statistics/labour/employment-and-unemployment/labour-force-australia/latest-release#data-downloads">ABS Labour Force</a></span>
</figcaption>
</figure>
<hr>
<p>These effects can be significant and are of particular concern during this pandemic, as University of Michigan economist Betsey Stevenson has pointed out <a href="https://www.brookings.edu/wp-content/uploads/2020/07/Stevenson_LO_FINAL.pdf">in an excellent paper</a> on how to mitigate those effects.</p>
<p>Finally, a job also has non-financial benefits. As US presidential candidate Joe Biden has rightly reminded us, a job is about <a href="https://twitter.com/JoeBiden/status/1317623931914813444?s=20">more than a paycheque</a>:</p>
<blockquote>
<p>It’s about dignity. It’s about respect. It’s about being able to look your kid in the eye and say everything will be okay.</p>
</blockquote>
<p>All of this points to why policy makers need to make low unemployment one of their core missions. </p>
<p>This involves central banks using monetary policy to reduce unemployment and smooth out the business cycle, and governments using fiscal policy to boost demand when it is flagging.</p>
<h2>Searching for jobs</h2>
<p>That said, there are two important imperfections in labour markets that make some amount of unemployment inevitable. The first is that employers and employees need to be matched together. This involves workers searching for the right job – a process that takes time.</p>
<p>As Peter Diamond, awarded the 2010 Nobel prize in economics for his pioneering work on “search theory”, <a href="https://www.jstor.org/stable/pdf/23045891.pdf?casa_token=CI39jOlP5NsAAAAA:il_1avlQVf-uXlbAvuaeDsCTIqnczVAt7TNkuO4OSM_98DYVMZbVx1Q-RPr3D0Z0_fXby9rYLMhU2G8scilRpexdqlL7PK07ZwN4mYa3fCJg54DDuDf3kA">has observed</a>: </p>
<blockquote>
<p>We have all visited several stores to check prices and/or to find the right item or the right size. Similarly, it can take time and effort for a worker to find a suitable job with suitable pay, and for employers to receive and evaluate applications for job openings.</p>
</blockquote>
<p>Indeed, searching for better matches between employers and employees is an important contributor to labour market efficiency. As Diamond noted, in the US on average 2.6% of employed workers have a different employer a month later. Some people spending some time unemployed is part of a healthy labour market.</p>
<p>A second important friction was <a href="https://academic.oup.com/oep/article-abstract/28/2/185/2360679">pointed out</a> by another Nobel laureate, Joseph Stiglitz (joint winner of the economics prize in 2001 for his work on asymmetric information). </p>
<h2>Efficiency wages</h2>
<p>That is, employers might not want to pay their workers the bare minimum they can get away with. Paying above market – what is called an “efficiency wage” – can induce workers to work harder and more efficiently, because the prospect of losing their job is even more painful.</p>
<p>Another way to think about this was offered by <a href="https://www.nobelprize.org/prizes/economic-sciences/2001/akerlof/facts/">George Akerlof</a> (co-winner of the 2001 Nobel economics prize with Stiglitz and A. Michael Spence). </p>
<p>Akerlof brought insights from sociology into economics by viewing the contract between employers and employees as, at least in part, about “gift exchange”. As <a href="https://www.jstor.org/stable/pdf/1816334.pdf?casa_token=u_e_BcfaiQYAAAAA:EXTX-VPswRPtdgzgsd2rp3LpZSb1rsbhhr-3zPVWwp9v44I-gjb0WU4c1BW46UfA1SOaL6sNrZMTx5XIPDNeoIiWyXeWpEt3CY32jg74lR5SjuRGpxRwHA">he put it</a>:</p>
<blockquote>
<p>According to this view, some firms willingly pay workers in excess of the market-clearing wage; in return they expect workers to supply more effort than they would if equivalent jobs could be readily obtained (as is the case if wages are just at market clearing).</p>
</blockquote>
<h2>What is ‘full employment’?</h2>
<p>These frictions in the labour market mean full employment, practically speaking, is not zero. It’s almost surely not 1% or 2%, either. The level depends, in part, on how brutal we are willing to make being unemployed. It also depends on the level of the minimum wage.</p>
<p>I, for one, am glad Australia does not cut off unemployment benefits after 16 weeks
(as in the US <a href="https://www.cbpp.org/research/economy/policy-basics-how-many-weeks-of-unemployment-compensation-are-available">state of Arkansas</a>) and consign the jobless to abject poverty. I’m also glad Australia’s national minimum hourly wage is A$19.84 (about US$14) – double the US federal <a href="https://www.dol.gov/general/topic/wages/minimumwage">minimum of US$7.25</a>.</p>
<p>Does that make unemployment higher here than in countries that take a harsher approach? It does. But it also makes us a more compassionate and empathetic society that takes human dignity seriously.</p>
<p>So when federal Treasurer Josh Frydenberg <a href="https://ministers.treasury.gov.au/ministers/josh-frydenberg-2018/transcripts/national-press-club-address-qa-national-press-club">said a few weeks ago</a> that once Australia’s unemployment rate is “comfortably below 6%” the task of “budget repair” should begin, I gasped.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/no-snapback-the-budget-sets-us-up-for-an-unreasonably-slow-recovery-heres-how-148098">No snapback: the budget sets us up for an unreasonably slow recovery. Here's how</a>
</strong>
</em>
</p>
<hr>
<p>If “comfortably below” means something like 4%, then fine. </p>
<p>Because of the labour market frictions mentioned above, and our approach to unemployment benefits, it’s going to be hard to get unemployment much below that in Australia.</p>
<p>But the idea we should tolerate unemployment of, say, 5.5% in normal times is, frankly, intolerable. Monetary and fiscal authorities should use all the firepower at their disposal to avoid that outcome.</p><img src="https://counter.theconversation.com/content/149070/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Richard Holden does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A high unemployment rate isn’t just bad for individuals without a job, and the costs aren’t just financial.Richard Holden, Professor of Economics, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1478982020-10-15T19:08:31Z2020-10-15T19:08:31ZIn defence of JobMaker: not perfect, but much to like<figure><img src="https://images.theconversation.com/files/363607/original/file-20201015-15-1gq84vp.jpg?ixlib=rb-1.1.0&rect=231%2C297%2C3160%2C1526&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Gorodenkoff/Shutterstock</span></span></figcaption></figure><p>There’s a lot to like about the <a href="https://budget.gov.au/2020-21/content/factsheets/download/jobmaker_hiring_credit_factsheet.pdf">JobMaker Hiring Credit</a> announced in the budget. </p>
<p>As lockdowns ease, it’s logical to cautiously move from protecting jobs in struggling sectors to generating new jobs in growing ones.</p>
<p>For the next year, employers who take on a new worker who has been on JobSeeker or a related benefit will receive A$200 per week for up to 12 months if the worker is aged 16 to 29 years, or $100 per week if aged 30 to 35 years.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/363576/original/file-20201015-19-p1xldn.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/363576/original/file-20201015-19-p1xldn.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/363576/original/file-20201015-19-p1xldn.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=386&fit=crop&dpr=1 600w, https://images.theconversation.com/files/363576/original/file-20201015-19-p1xldn.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=386&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/363576/original/file-20201015-19-p1xldn.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=386&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/363576/original/file-20201015-19-p1xldn.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=485&fit=crop&dpr=1 754w, https://images.theconversation.com/files/363576/original/file-20201015-19-p1xldn.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=485&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/363576/original/file-20201015-19-p1xldn.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=485&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
</figcaption>
</figure>
<p>The employer will have to demonstrate that the new worker will increase overall
headcount and payroll, and the payment will top out at $10,400 per position.</p>
<p>The budget says it will support <a href="https://ministers.treasury.gov.au/ministers/josh-frydenberg-2018/speeches/budget-speech-2020-21">450,000 jobs</a>.</p>
<p>Many will simply be brought forward, created earlier than they would have been; but this itself should be helpful, contributing to a virtuous cycle of employment, confidence, and consumer demand.</p>
<p>Past experience suggests that about <a href="https://docs.employment.gov.au/system/files/doc/other/employment_pathway_fund_chapter_2_wage_subsidies.pdf">10%</a> will be truly additional – jobs that wouldn’t have been created without the subsidy.</p>
<h2>Cheaper per job than tax cuts</h2>
<p>But even then, unlike the personal tax cuts, which the Australian Council of Social Service believes will cost <a href="https://twitter.com/ACOSS/status/1315475746131898368">$475,000</a> per job created, the cost per job would be a more modest $80,000.</p>
<p>More importantly, the hiring credit could prompt employers to take on people they might not otherwise have considered - those facing prolonged unemployment. </p>
<p>It is likely that by next year, more than a million people will be on unemployment payments for over a year - three times the peak in long-term unemployment after the early-90s recession. </p>
<p>Young people – those under 35 – have been targeted because they lost <a href="https://www.ceda.com.au/Digital-hub/Blogs/CEDA-Blog/October-2020/JobMaker-is-smart-policy-addressing-an-urgent-problem">far more jobs</a> in this recession than older people.</p>
<hr>
<p><strong>Employment by age, change since February 2020</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/363637/original/file-20201015-17-1co54wb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/363637/original/file-20201015-17-1co54wb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/363637/original/file-20201015-17-1co54wb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=238&fit=crop&dpr=1 600w, https://images.theconversation.com/files/363637/original/file-20201015-17-1co54wb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=238&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/363637/original/file-20201015-17-1co54wb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=238&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/363637/original/file-20201015-17-1co54wb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=300&fit=crop&dpr=1 754w, https://images.theconversation.com/files/363637/original/file-20201015-17-1co54wb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=300&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/363637/original/file-20201015-17-1co54wb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=300&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="https://www.rba.gov.au/speeches/2020/sp-gov-2020-10-15.html">Source: ABS, RBA</a></span>
</figcaption>
</figure>
<hr>
<p>Limited work experience and qualifications means many young people will find themselves out of paid work for a long time. </p>
<p>But they’re not the only ones. There are already over 600,000 people long-term unemployed on benefits for more than a year, most of whom are over 40. Older unemployed people are right to be concerned the wage subsidy might encourage employers to overlook them for younger applicants. </p>
<h2>Room for improvement</h2>
<p>It’d be better to also target the subsidy to the <a href="https://www.ceda.com.au/CEDA/media/ResearchCatalogueDocuments/PDFs/CCEP-Labour-2020-credit-wage-subsidy-Jeff-Borland.pdf">duration of unemployment</a>; for example to young people unemployed for six months, and others out of paid work for at least a year. </p>
<p>Otherwise a large and diverse set of talents might be wasted. </p>
<p>The subsidies might also be too low. $200 per week is around a quarter of the full-time minimum wage, enough to encourage employers to expand entry-level jobs of around 20 hours a week but perhaps not enough to encourage employers to expand full-time jobs.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/budget-2020-promising-tax-breaks-but-relying-on-hope-147012">Budget 2020: promising tax breaks, but relying on hope</a>
</strong>
</em>
</p>
<hr>
<p>This could hasten the shift already under way from fulltime to part-time employment in entry-level jobs in retail, hospitality and other industries. That might reduce unemployment in the short-term, but at the expense of entrenching higher levels of under-employment (people lacking the paid working hours they need). </p>
<p>Another issue is administration. An employment service on the ground would be better at matching the needs of workers and employers and organising pre-vocational training than workers and employers left to their own devices.</p>
<h2>It’ll be important to avoid abuses</h2>
<p>That could also help ensure the integrity of the scheme. Wage subsidy schemes give rise to concerns that existing workers may be displaced, or that people could be laid off when the subsidy ends regardless of their performance.</p>
<p>Guaranteeing the integrity of the scheme will be vital to ensure it’s fair to all involved and to sustain public support for it.</p>
<p>JobMaker is a welcome innovation, the logical next step after JobKeeper.</p>
<p>If, together with a scaling up of existing wage subsidy schemes, it generates full and part-time jobs for people of all ages who would otherwise be left behind, it could make a real difference.</p><img src="https://counter.theconversation.com/content/147898/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>In addition to his adjunct role at UNSW Sydney, Dr Peter Davidson works for the Australian Council of Social Service. Views expressed are his own.</span></em></p>It’ll direct money to employers who actually create jobs.Peter Davidson, Adjunct Senior Lecturer, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1406322020-07-12T20:00:02Z2020-07-12T20:00:02ZThere’s serious talk about a “job guarantee”, but it’s not that straightforward<p>Suddenly, the idea of a “job guarantee” is back in vogue. </p>
<p>Lawyer, academic, land rights activist and founder of the Cape York Institute <a href="https://www.theaustralian.com.au/commentary/the-case-for-a-government-jobs-guarantee/news-story/dee6e9545cd5af967c853e2f0481b02d">Noel Pearson</a> has come out of it favour of it, University of Newcastle labour market specialist <a href="http://bilbo.economicoutlook.net/blog/?p=45363">Bill Mitchell</a> has a document before the prime minister, and the Per Capita think tank is pushing for a <a href="https://percapita.org.au/our_work/coming-of-age-in-a-crisis-young-workers-covid-19-and-the-youth-guarantee/">youth-only guarantee</a>. </p>
<p>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).</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/forget-jobseeker-in-our-post-covid-economy-australia-needs-a-liveable-income-guarantee-instead-141535">Forget JobSeeker. In our post-COVID economy, Australia needs a 'liveable income guarantee' instead</a>
</strong>
</em>
</p>
<hr>
<p>The buffer of jobs on offer would “<a href="https://www.theaustralian.com.au/inquirer/full-employment-is-a-policy-choice-scott-morrison-must-make/news-story/d58e4674b218f4b0728732826507eafa">normally be small and would shrink as private sector activity recovers</a>”. </p>
<p>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.</p>
<h2>Working Nation</h2>
<p>The centrepiece of <a href="https://www.aph.gov.au/binaries/library/pubs/cib/1994-95/95cib32.pdf">Working Nation</a>, unveiled by Prime Minister Paul Keating in February 1994, the so-called “<a href="https://www.cambridge.org/core/journals/journal-of-social-policy/article/job-guarantees-for-the-unemployed-lessons-from-australian-welfare-reform/B19BCCB03A31C9BD0CE078925F7D21D3">Job Compact</a>” guaranteed subsidised employment for six to 12 months to everyone who had been unemployed for more than 18 months. </p>
<p>This article draws on my <a href="http://unsworks.unsw.edu.au/fapi/datastream/unsworks:53082/SOURCE02?view=true">research</a> into what happened, including interviews with senior government officials from that time.</p>
<p>By late 1993 300,000 people had been reliant on unemployment payments for more than 12 months.</p>
<p>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.</p>
<blockquote>
<p>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)</p>
</blockquote>
<p>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.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/346660/original/file-20200709-54-j8ynn3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/346660/original/file-20200709-54-j8ynn3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/346660/original/file-20200709-54-j8ynn3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=971&fit=crop&dpr=1 600w, https://images.theconversation.com/files/346660/original/file-20200709-54-j8ynn3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=971&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/346660/original/file-20200709-54-j8ynn3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=971&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/346660/original/file-20200709-54-j8ynn3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1220&fit=crop&dpr=1 754w, https://images.theconversation.com/files/346660/original/file-20200709-54-j8ynn3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1220&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/346660/original/file-20200709-54-j8ynn3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1220&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Even with payment, employers weren’t keen to take on subsidised applicants.</span>
</figcaption>
</figure>
<p>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).</p>
<p>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).</p>
<p>As has been the case in other <a href="https://books.google.com.au/books?id=_VFhkQEACAAJ&dq=Card+D,+Kluve+J,+Weber+A+(2018),+What+Works+active+labour+market?&hl=en&sa=X&ved=0ahUKEwjcyZrAuYDqAhXZfX0KHRUTD_sQ6AEIVjAF">overseas</a> public sector job creation schemes, these jobs often turned out to be very different to mainstream jobs, reducing transitions to unsubsidised jobs.</p>
<p>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.</p>
<blockquote>
<p>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)</p>
</blockquote>
<p>And the language of the program became increasingly punitive.</p>
<blockquote>
<p>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)</p>
</blockquote>
<p>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.</p>
<h2>‘High cost, low outcomes’</h2>
<p>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 <a href="https://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=DELSA/ELSA/WD/SEM(2011)14&docLanguage=En">20%</a>.</p>
<p>The official evaluation pointed to its “<a href="https://www.worldcat.org/title/working-nation-evaluation-of-the-employment-education-and-training-elements/oclc/37073550">high cost and low outcomes</a>”, and concluded it was “not the most appropriate strategy for assisting the long-term unemployed”. </p>
<p>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”.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/when-the-coronavirus-supplement-stops-jobseeker-needs-to-increase-by-185-a-week-138417">When the Coronavirus Supplement stops, JobSeeker needs to increase by $185 a week</a>
</strong>
</em>
</p>
<hr>
<p>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. </p>
<p>Subsidised jobs can help reduce long-term unemployment, as shown by the success of the <a href="https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/223120/impacts_costs_benefits_fjf.pdf">Future Jobs Fund</a> in the Britain and small-scale <a href="https://docs.employment.gov.au/system/files/doc/other/employment_pathway_fund_chapter_2_wage_subsidies.pdf">wage subsidy schemes</a> in Australia. </p>
<p>Britain’s Conservative Government has just announced plans to generate 350,000 <a href="https://www.theguardian.com/politics/2020/jul/07/summer-statement-rishi-sunak-plans-temporary-job-creation-scheme-for-under-25s">subsidised community jobs </a>for unemployed young people.</p>
<p>But Australia’s experience with the Job Compact shows guarantees are no panacea. </p>
<h2>Subsidised jobs help, but they’re no panacea</h2>
<p>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. </p>
<p>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. </p>
<p>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. </p>
<p>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.</p><img src="https://counter.theconversation.com/content/140632/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter Davidson is employed by the Australian Council of Social Service. Views expressed do not represent those of ACOSS. </span></em></p>Australia has tried it before, in the 1990s. The proportion of participants eventually getting unsubsidised jobs was low.Peter Davidson, Adjunct Senior Lecturer, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1356762020-04-15T04:22:41Z2020-04-15T04:22:41ZThe next employment challenge from coronavirus: how to help the young<figure><img src="https://images.theconversation.com/files/327899/original/file-20200415-117553-mwagzz.jpg?ixlib=rb-1.1.0&rect=943%2C289%2C2912%2C1464&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://unsplash.com/@icons8">Icons8 Team on Unsplash</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc/4.0/">CC BY-NC</a></span></figcaption></figure><p>Even before COVID-19, young Australians were doing it hard in the labour market. </p>
<p>Slower economic growth and the increasing employment of older Australians since the global financial crisis had been crowding them out.</p>
<p>In <a href="https://drive.google.com/file/d/1TJ8IVzerfgGXrsrDwWJfa_GwlSVIh7cf/view">recent research</a> Michael Coelli and I estimate that crowding out reduced the proportion of young Australians aged 15 to 24 years in employment by 4 to 5 percentage points since the global financial crisis.</p>
<p>As a result, more young people have become long-term unemployed or have had to gain full-time work through part-time work. And many of those who have found work have needed to spend extra time and resources (doing things such as unpaid internships) to get it.</p>
<p>Now, young Australians are going to be hardest hit by the COVID-19 recession. </p>
<p>Partly this is because the young are always hardest hit during economic downturns – needing to make the transition from education to work at a time when there are few new jobs on offer.</p>
<h2>Young Australians are still reeling from the GFC</h2>
<p>Look at what happened after the global financial crisis. </p>
<p>The chart below uses data from the <a href="https://melbourneinstitute.unimelb.edu.au/hilda">Household, Income and Labour Dynamics in Australia</a> survey to show changes in employment to population ratios over time compared to 2008, which was the start of the global financial crisis.</p>
<p>The proportion of the population aged 25 to 54 years in employment fell for several years before bouncing back. </p>
<p>But the decline in the proportion of young who were employed was much larger – almost double the size – and took longer to reverse.</p>
<p>Young Australians went into the global financial crisis doing increasingly better than older Australians and came out of it doing increasingly worse.</p>
<hr>
<p><strong>Change in employment-to-population ratio, by age group</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/327886/original/file-20200414-117593-3la1fq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/327886/original/file-20200414-117593-3la1fq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/327886/original/file-20200414-117593-3la1fq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=307&fit=crop&dpr=1 600w, https://images.theconversation.com/files/327886/original/file-20200414-117593-3la1fq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=307&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/327886/original/file-20200414-117593-3la1fq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=307&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/327886/original/file-20200414-117593-3la1fq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=386&fit=crop&dpr=1 754w, https://images.theconversation.com/files/327886/original/file-20200414-117593-3la1fq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=386&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/327886/original/file-20200414-117593-3la1fq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=386&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Percentage change from ratio in 2008.</span>
<span class="attribution"><a class="source" href="https://melbourneinstitute.unimelb.edu.au/hilda">HILDA</a></span>
</figcaption>
</figure>
<hr>
<h2>COVID-19 should be worse</h2>
<p>This crisis brings brings with it extra reasons to believe young will be hard hit. </p>
<p>First, a sizable group of older workers are likely to delay retirement to rebuild their superannuation balances. This will make it even harder for young jobseekers to find jobs. </p>
<p>Second, the young account for a disproportionate share of workers in industries being most affected by COVID-19 shutdowns, such as hospitality and retail trade. </p>
<p>Third, the young are also a large proportion of casual employees who have been in their jobs for less than 12 months. </p>
<p>That means they will not be eligible for the <a href="https://theconversation.com/jobkeeper-payment-how-will-it-work-who-will-miss-out-and-how-to-get-it-135189">JobKeeper payment</a>, making them more likely to be laid off and less likely to be rehired than workers who are.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/jobkeeper-payment-how-will-it-work-who-will-miss-out-and-how-to-get-it-135189">JobKeeper payment: how will it work, who will miss out and how to get it?</a>
</strong>
</em>
</p>
<hr>
<p>Worryingly, the disadvantaged young are likely to be the hardest hit of all. </p>
<p>To see this, we can again draw on experience from the financial crisis. </p>
<p>The chart below presents the same information on changes in the employment/population ratio as the chart above – this time for groups within the 20 to 24 age group.</p>
<p>Those with bachelor’s degrees were largely unaffected. </p>
<p>Those who were in full-time study at the time suffered a drop in employment, but recovered after a decade. </p>
<p>But those not in full-time study and who do not have a bachelor’s degree saw a massive fall in their likelihood of employment of 11 percentage points, which has only partly been reversed.</p>
<hr>
<p><strong>Change in employment-to-population ratio, 20 to 24 year olds</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/327889/original/file-20200415-117578-jce1hs.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/327889/original/file-20200415-117578-jce1hs.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/327889/original/file-20200415-117578-jce1hs.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=307&fit=crop&dpr=1 600w, https://images.theconversation.com/files/327889/original/file-20200415-117578-jce1hs.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=307&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/327889/original/file-20200415-117578-jce1hs.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=307&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/327889/original/file-20200415-117578-jce1hs.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=386&fit=crop&dpr=1 754w, https://images.theconversation.com/files/327889/original/file-20200415-117578-jce1hs.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=386&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/327889/original/file-20200415-117578-jce1hs.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=386&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Percentage change from ratio in 2008.</span>
<span class="attribution"><a class="source" href="https://melbourneinstitute.unimelb.edu.au/hilda">HILDA</a></span>
</figcaption>
</figure>
<hr>
<h2>Why should we worry about the impact on the young?</h2>
<p>We should worry about the impact on the young because it matters for equity today, but also for the long-term consequences. </p>
<p>We know that what happens to people at the start of their time in the labour market will affect what happens to them in the rest of their working lives.</p>
<p>Many <a href="https://www.nber.org/digest/nov06/w12159.html">international studies</a> have shown that trying to move into employment during a major economic downturn cuts the probability of employment and future earnings for a decade or more. </p>
<p>Why this occurs is less well-established. Reasons suggested include being forced to take lower quality jobs, losing skills and losing psychological well being.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/what-we-missed-while-we-looked-away-the-growth-of-long-term-unemployment-119870">What we missed while we looked away -- the growth of long‐term unemployment</a>
</strong>
</em>
</p>
<hr>
<p>The best way to improve the outlook for young Australians is to get back to high rates of job creation as quickly as possible. It is what the government is trying to achieve by keeping jobs open through JobKeeper and other initiatives.</p>
<p>In the meantime, there is a pressing case for programs targeted at the young to improve their prospects of employment when the economy recovers. </p>
<p>Priority should be given to the low skilled and long-term unemployed. </p>
<p>Recommendations made by the <a href="https://docs.employment.gov.au/system/files/doc/other/final_-_i_want_to_work.pdf">Employment Services Expert Advisory Panel</a> on enhanced services to assist job seekers with high barriers to employment would be a good place to start.</p>
<h2>New graduates are in great danger</h2>
<p>Something also needs to be done for the many young people who will graduate over the next 12 months. </p>
<p>To prevent them having a spell of unemployment, they could be encouraged to undertake further study - with a holiday from Higher Education Loans Scheme loans
and free TAFE courses for 2021.</p>
<p>Allowing young people to build and maintain contact with the labour market through scaled-up and government-funded paid internship programs would be a further valuable step, although its implementation would need to be timed to match the economic recovery.</p><img src="https://counter.theconversation.com/content/135676/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jeff Borland receives funding from the Australian Research Council. He was a member of the Expert Advisory Panel on employment services that is mentioned in the article.
This article uses unit record data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey. The HILDA Project was initiated and is funded by the Australian Government Department of Social Services (DSS) and is managed by the Melbourne Institute of Applied Economic and Social Research (Melbourne Institute). The findings and views reported in this paper are those of the author and should not be attributed to either DSS or the Melbourne Institute.</span></em></p>Young Australians, particularly young unskilled Australians, will scared by what’s about to happen for a decade or more.Jeff Borland, Professor of Economics, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1198702019-07-07T20:08:27Z2019-07-07T20:08:27ZWhat we missed while we looked away – the growth of long‐term unemployment<figure><img src="https://images.theconversation.com/files/282776/original/file-20190705-51297-1amd886.jpg?ixlib=rb-1.1.0&rect=167%2C514%2C3443%2C1610&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The long-term unemployed are a growing proportion of the unemployed. It's hard to work out why.</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Australia took its eyes off long-term unemployment, for what it thought were good reasons.</p>
<p>Long-term unemployment is defined as unemployment for more than 12 months in a row.</p>
<p>In the early 1990s, after the “<a href="https://en.wikipedia.org/wiki/Early_1990s_recession_in_Australia">recession we had to have</a>”, long-term unemployment grew to a postwar high of 4% and became a major concern for the government amid fears that once Australians had became long-term unemployed, they would never easily get back to work.</p>
<p>Over time, that concern lessened. </p>
<p>Strong economic growth delivered a steady decline in the overall rate of unemployment and, as a consequence, long-term unemployment. </p>
<h2>With the long-term rate low, we looked away…</h2>
<p>By the time the financial crisis hit in 2008, Australia’s long-term unemployment rate was down to just 0.6%. After the crisis, our lack of attention continued. </p>
<p>The crisis had caused only a relatively small increase in unemployment, and it seemed reasonable to assume that it hadn’t caused much of an uptick in long-term unemployment.</p>
<p>In absolute terms, it hadn’t. Today, long-term unemployment is 1.25%, still way below its peak in the early 1990s. </p>
<p>But that figure of 1.25% demands closer attention.</p>
<p>It is about 0.3 percentage points higher than would have been the case for the same unemployment rate a few years earlier.</p>
<h2>…and kept looking away…</h2>
<p>Those few fractions of a percentage point mightn’t seem like much, but they add up to 41,000 more long-term unemployed Australians than would be expected.</p>
<p>The surprising growth in long-term unemployment relative to unemployment can be seen in the figure below, which shows rates of unemployment and long-term unemployment from 2003 onwards.</p>
<hr>
<p><strong>Unemployment rates and long-term unemployment rates, 2003-19</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/283614/original/file-20190711-44487-kjm932.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/283614/original/file-20190711-44487-kjm932.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/283614/original/file-20190711-44487-kjm932.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=305&fit=crop&dpr=1 600w, https://images.theconversation.com/files/283614/original/file-20190711-44487-kjm932.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=305&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/283614/original/file-20190711-44487-kjm932.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=305&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/283614/original/file-20190711-44487-kjm932.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=383&fit=crop&dpr=1 754w, https://images.theconversation.com/files/283614/original/file-20190711-44487-kjm932.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=383&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/283614/original/file-20190711-44487-kjm932.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=383&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="https://www.abs.gov.au/ausstats/abs@.nsf/mf/6291.0.55.001">ABS 6291.0.55.001 (seasonally adjusted)</a></span>
</figcaption>
</figure>
<hr>
<p>It is clear that something changed after mid-2016. </p>
<p>Before then, an unemployment rate of 5% meant a rate of long-term unemployment of about 1%. After then it has meant a long-term unemployment rate of about 1.3%.</p>
<p>While the change has become most apparent since 2016, I argue in my recent <a href="https://drive.google.com/file/d/1e-zIf4V3zVlHWWAI8BYAlafnkYRKNAhf/view">briefing on this topic</a> that it began earlier, in the years between 2009 and 2016.</p>
<p>During those seven years, the overall rate of unemployment changed little. </p>
<h2>…while something changed</h2>
<p>Standard theories predict that if the overall rate of unemployment remains stable, the rate of long-term unemployment should also remain stable. </p>
<p>But the rate of long-term unemployment virtually doubled from 0.7% to 1.35% during those seven years, meaning the proportion of the unemployed who were long-term unemployed climbed from 13% to 23%. </p>
<p>The growth in long-term unemployment has been pervasive – affecting male and female jobseekers equally, and all age categories – although young jobseekers seem to have been the most affected.</p>
<p>At this stage, the reasons for the increase remain unclear.</p>
<h2>Low wage growth deepens the mystery</h2>
<p>Paradoxically, it makes Australia’s current low rate of wage growth even harder to understand.</p>
<p>Standard theories characterise the long-term unemployed as being less immediately employable than the short-term unemployed, meaning that as long-term unemployment grows as a proportion of total unemployment, employers will try to fill vacancies from a smaller and smaller pool of short-term unemployed, making it easier for existing workers to extract higher wages.</p>
<p>If this is happening, it is being more than offset by something else.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/buckle-up-2019-20-survey-finds-the-economy-weak-and-heading-down-and-thats-ahead-of-surprises-119455">Buckle up. 2019-20 survey finds the economy weak and heading down, and that's ahead of surprises</a>
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</em>
</p>
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<p>What this development certainly does mean is that we ought to be concentrating more on getting the long-term unemployed back into work. Fortuitously, this is already happening. </p>
<p>In 2018 an expert panel commissioned by the then Commonwealth Department of Jobs and Small Business recommended rebalancing of employment services towards jobseekers facing the <a href="https://docs.employment.gov.au/system/files/doc/other/final_-_i_want_to_work.pdf">highest barriers to employment</a>. </p>
<p>The increasing chunk of the unemployed that are long-term unemployed makes the need for such a shift more critical.</p><img src="https://counter.theconversation.com/content/119870/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jeff Borland receives funding from the Australian Research Council. He was a member of the expert panel on employment services in Australia commissioned by the Commonwealth Department of Jobs and Small Business that is referenced at the end of the article.</span></em></p>We’ve 41,000 more long-term unemployed than would be expected given the unemployment rate. Something has changed.Jeff Borland, Professor of Economics, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.