Budget 2011–12: Workforce participation measures
The Budget includes a range of measures that seeks to encourage and help the very long-term unemployed, people with a disability and single parents into training and employment.
Over recent years, with low and falling unemployment, job seekers who have relevant skills and minimal barriers to employment have tended to find work relatively quickly. Those who remain on income support are job seekers who were already disadvantaged in the labour market and have become increasingly so over time. The long-term unemployed now make up around 50 per cent of those in receipt of Newstart Allowance (NSA). In recognition of this problem, the Rudd-Gillard Government has substantially reformed Australia’s employment and disability employment services to better meet the needs of difficult-to-place job seekers and the long-term unemployed. This has built on the previous efforts of the Howard Government through its 2006 Welfare to Work reforms.
The 2011–12 budget measures should be seen as part of an on-going effort by successive Australian Governments to increase the employment participation and self-reliance of disadvantaged job seekers. The measures attempt to strike a balance between incentives and obligations—‘carrots and sticks’—for employment participation. Thus, for example, on the one hand they tighten the eligibility requirements for Youth Allowance (other) (YA(o)) and NSA recipients, while on the other hand they remove tax obstacles that discourage young unemployed people, single parents and people on the Disability Support Pension from working.
The most substantial measures include:
- $558.5 million over four years for a National Workforce Development Fund to support relevant, industry-based training in areas of skill shortage
- $143.1 million over four years for up to 30 000 additional Language, Literacy and Numeracy Program training places
- $80.0 million over four years for additional training places for single and teenage parents in receipt of government-provided income support
- $133.3 million over four years for very long-term unemployed job seekers to undertake approved Work Experience Activities for 11 months of the year (rather than six months under the current scheme)
- $11.3 million over three years for wage subsidies to be paid to employers who provide employment placements to people with disability who have been unemployed for at least 12 months
- $94.6 million over four years for wage subsidies for employers of very long-term unemployed job seekers to provide paid employment experience to help them transition into paid employment
- $21.8 million over three years for an awareness campaign that promotes the benefits of employing the very long-term unemployed and people with a disability
- $22.7 million over four years for professional career advisory services for single parents and support services for parents and children to improve personal and parenting skills and children’s educational and health outcomes
- $35.3 million over four years for measures that streamline services for job seekers (as part of the Government’s response to the Independent Review of the Job Seeker Compliance Framework)
The measures also include changes to employment services arrangements that reduce red-tape (largely through reduced reviews and unnecessary assessments). These are calculated to deliver savings of $167.8 million over four years. The Government has wound up the Innovation Fund, which is calculated to deliver savings of $41.0 million over three years. The changes to eligibility criteria for YA(o) and NSA are expected to provide further savings of $183.9 million over four years.
Disadvantaged job seekers face significant barriers in gaining employment and overcoming these barriers is easier said than done.
The measures introduced by the Government indicate that it is aware of the difficulties faced by disadvantaged job seekers and it is serious about getting them into work. However, these measures need to be viewed as one further step (albeit a reasonably large one) on the long road towards getting disadvantaged people into employment. Along with the Government’s reform of employment services, they are a contribution to an on-going investment that will require significantly more funding and time before it is likely to realise substantial dividends.
A majority of the measures are supply-side initiatives that are clearly necessary given that most of the job seekers who are being targeted are severely disadvantaged. These people typically have lower levels of education, are lacking in literacy and numeracy skills, have little or no recent employment experience and suffer from health problems and social isolation, among other things.
The additional funding for language, literacy and numeracy training is therefore welcome. The Australian Bureau of Statistics (ABS) 2006 Adult Literacy and Life Skills Survey found that approximately million Australians aged 15 to 74 years (46 per cent) had literacy scores that were below the minimum level required ‘for individuals to meet the complex demands of everyday life and work in the emerging knowledge-based economy’. On the numeracy scale, the ABS found that approximately 7.9 million Australians (53 per cent) had numeracy scores that were below the minimum required. The Business Council of Australia has recently observed that many job seekers who attend interviews are lacking in basic literacy skills.
The success of the measure that requires very long-term unemployed job seekers to undertake Work Experience Activities for 11 months of the year, rather than six months, is likely to be dependent on the quality and the relevance of the activities. If the activities do not involve the development of relevant skills in truly work-like environments then there is a risk that this could amount to time wasted. The provision of a $1000 Employment Pathway Fund credit to fund additional assistance to each job seeker could help to enhance the value of Work Experience Activities. It is worth noting that the Welfare to Work evaluation found that participation in Full-Time Work for the Dole and Wage Assist services only realised modest outcomes for very long-term unemployed job seekers and for the public purse, in terms of reduced reliance on income support.
The Budget includes funding for increased wage subsidies for employers of people with disability who have been unemployed for at least 12 months and for very long-term unemployed job seekers (that is, job seekers who have been in receipt of income support for two years or more). It also includes funding for an awareness campaign that promotes the benefits of employing people with a disability as well as the very long-term unemployed. Approaches that link employer demand strategies with employer incentive strategies are more likely to prove successful in terms of recruitment and retention than approaches where these strategies are used in isolation. Hence, the budget measures, which seek to increase employers’ awareness of the potential benefits of hiring people with disabilities and the very long-term unemployed while also promoting programs and initiatives that make it easier for them to do so, should, to some degree, complement one another.
However, it is important to recognise that wage subsidies are viewed by employers as an incentive that might help to get a disadvantaged job seeker ‘over the line’, but not one that would actually create a job opportunity. An employer survey that was conducted in 2007 and reported on in the evaluation of the Welfare to Work reforms, showed that employers are generally reluctant to employ people with a disability. They are even more unwilling to employ very long-term unemployed job seekers, considering them to be a ‘last resort’. Employer attitudes are likely to have changed over the past few years as unemployment has fallen, and with it the pool of available job seekers. Nevertheless, they are aware that people with disability and very long-term unemployed people frequently lack basic employability skills and face ongoing barriers to employment. As a result, what employers appear to want is broad, flexible placement support that would target the on-going needs of individuals in the work place.
Relevant, industry-based training in areas of skills shortage through the National Workforce Development Fund should promote industry investment in Australia’s workforce and may assist many less disadvantaged job seekers. Given that the training is to be enterprise-based, this should address any industry concerns that the vocational training with which job seekers are provided should meet their demand for particular skill sets. The training will not be ‘training for training’s sake’.
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