Workforce participation measures

Budget Review 2015–16 Index

Dr Matthew Thomas

Youth Employment Strategy

Unemployment among young Australians is significantly higher than that for the population as a whole, and has been rising since 2008 and the global financial crisis.[1]

In response to this ongoing problem, the Government has introduced a Youth Employment Strategy, which is made up of range of measures aimed at increasing young people’s participation in education, training and employment and ensuring that they do not become long-term unemployed.[2] These measures include:

  • $212.0 million over four years for intensive support services to be provided by a network of community-based organisations to early school leavers aged 15 to 21 years
  • $13.5 million over four years to reinforce existing ‘earn or learn’ requirements, requiring early school leavers aged 15 to 21 years to study, actively look for work, or undertake a combination of the two and
  • $105.7 million over five years for intensive support for vulnerable young job seekers who are at risk of long-term unemployment, including people with mental illness, young refugees and migrants and young parents.

The Budget also includes further, complementary measures:

  • enabling access to the Youth Wage Subsidy for eligible job seekers aged 15 to 29 years after 6 months rather than after 12 months and
  • $18.3 million over five years to expand work experience opportunities for people aged 18 years and over and provide them with a supplement to assist with the costs of participating in work experience.

The community sector has on the whole welcomed the Youth Employment Strategy. For example, the Brotherhood of St Laurence has stated: ‘we are pleased to see the Abbott Government has begun to take the necessary steps to tackle the steep challenge that youth unemployment poses to our nation and neighbourhoods’.[3] Similarly, the Australian Council of Social Service has described the Strategy as ‘a move in the right direction’.[4]

Other measures

While the emphasis in this year’s Budget is on tackling youth unemployment, it does include other measures that seek to increase the employment participation of other groups vulnerable to unemployment, including mature age job seekers, parents and people with disability.

The Government has restructured the arrangements for providing wage subsidies by consolidating the four existing wage subsidy programs and establishing a single wage subsidy pool. The pool is funded as a part of the broad suite of jobactive employment services that are to commence on 1 July 2015, and is substantially made up of funding that has been redirected from other programs.

The measures improve access to the Youth Wage Subsidy (as noted above) and provide for more generous Tasmanian Jobs Program subsidies. They introduce a new wage subsidy stream for parents who receive income support payments and have participation requirements. Tasmanian Jobs Program subsidies are to be doubled to $6,500 from 13 May 2015, whilst $10,000 payments for the Restart Wage Subsidy are to be made available over 12 months rather than the current 24 months.[5] These changes have been introduced in response to the low take-up rate of subsidies under both of these programs.[6]

The Budget provides $24.9 million over four years for a new job seeker compliance measure. The first part of the measure extends the application of existing ‘No show, No pay’ sanctions. The second part allows for the suspension of income support payments of job seekers deemed not to have undertaken adequate job search efforts, and does not allow them to have the penalty waived by undertaking a compliance activity.

Typically, compliance measures result in savings due to the reduced amount paid out in income support payments. However, the anticipated savings of $6.9 million over three years to be realised as a result of the measure are more than offset by the expected cost of $31.6 million over four years, with a net cost of $24.9 million over four years.

Australian Greens Senator, Rachel Siewert, has criticised the measure, arguing that ‘if the government is going to spend $3 to earn just $1 back, it should be better invested on measures that genuinely help people to engage with, find and maintain attachment to work’.[7] A spokesperson for Assistant Employment Minister, Luke Hartsuyker, is reported to have defended the cost, insisting that the government ‘is committed to reducing the costs and red tape burden for employment providers, and other organisations, of non-attendance by job seekers at appointments and activities’.[8]

The Budget provides $25.2 million over four years for measures that seek to improve access to employment services for people with disability. The package is made up of:

  • $9.0 million over three years to create a JobAccess Gateway—a central point for disability employment information and services
  • $2.2 million over four years to extend Disability Employment Services (DES) to young people with a disability who are participating in post-school employment programs and
  • $14.0 million over four years to allow people with a disability who are employed in Australian Disability Enterprises (ADE) to access DES support for up to two years to help them move towards employment in the open labour market. Currently, people must leave their ADE in order to access DES support.[9]

The measures are to be funded through savings achieved by introducing a new benchmark under which DES providers are paid an outcome fee when job seekers who are assessed as having the capacity to work at least 23 hours per week gain this amount of work. Currently, providers receive an outcome payment where job seekers gain 15 hours work per week, despite having a greater assessed work capacity.[10]

The disability sector would appear to be broadly supportive of the package of employment measures, with Craig Wallace, President of People with Disability Australia, describing it as the beginning of a long-awaited comprehensive jobs plan.[11]

Comment

Following the cessation of funding for programs that fell under the National Partnership on Youth Attainment and Transitions (which focused on those aged 15 to 24 years and young people at risk) at the end of 2014, there have been no youth-specific employment-related government initiatives, with the exception of the Job Commitment Bonus.[12] The relatively successful and well-regarded Youth Connections program that provided individualised support to young people at risk of not attaining Year 12 (or equivalent) education was one of the programs for which funding was not renewed.[13]

The emphasis in last year’s Budget was on activating unemployed young people through the use of coercive measures. The most severe of these was the measure which sought to introduce a six-month waiting period before payment commenced for a majority of Newstart Allowance (NSA) and Youth Allowance (YA) claimants aged under 30 years (this has been revised to a four week wait for under 25-year-olds in this year’s budget—see budget review article). In the face of sustained opposition to this measure from a number of quarters, and calls from the community sector for a new approach to assisting unemployed young people, the Government has developed the Youth Employment Strategy.[14]

The Strategy is well-structured and, indeed, best practice, inasmuch as it supports intensive interventions for disadvantaged young people who are at risk of becoming disengaged and long-term unemployed.[15] The Budget’s emphasis on work experience, earlier access to the Youth Wage Subsidy, and coordinated regional support for young people at risk, is likely to assist some young people in moving towards employment.

A number of commentators have observed that the Strategy represents an important first step in tackling youth unemployment.[16] If sustainable employment outcomes are to be realised for disadvantaged young people, however, then this is likely to demand ongoing intensive support for them, as well as more jobs and employers who are willing to hire young people. As such, much will depend on the success or otherwise of the Budget’s Growing Jobs and Small Business package. Should small business owners be unwilling or unable to employ young people, then an alternative strategy for increasing productivity and investment in jobs for young people may be required.



[1].          Australian Bureau of Statistics (ABS), Labour Force, Australia, Apr 2015, cat. no. 6202.0, ABS, Canberra, 2015. As Table 17 shows, as at July 2009, the end of the global financial crisis, the rate of unemployment among those aged 15 to 24 years was 11.9%. At April 2015, the rate was 13.6%.

[2].          The budget information in this article has been taken from the following document unless otherwise sourced:  Australian Government, Budget measures: budget paper no. 2: 2015–16.

[3].          Brotherhood of St Laurence, Youth Employment Strategy: action started to address crisis of youth joblessness, media release, 12 May 2015.

[4].          Australian Council of Social Service, ACOSS on Budget 2015: better direction but lower income earners still doing the heavy lifting, media release, 12 May 2015.

[5].          The Restart Wage Subsidy is targeted at job seekers who are aged 50 years or over and who have been unemployed or on income support for a minimum of six months. Under current arrangements employers are paid $3,000 after six months, $3,000 after 12 months, $2,000 after 18 months and $2,000 after 24 months.

[6].          See B Shields, ‘Key Abbott government employment scheme struggles to meet target’, The Sydney Morning Herald, (online edition), 2 January 2015.

[7].          D Hurst, Federal budget 2015: job seeker penalty increases to cost more than savings, The Guardian, (online edition), 14 May 2015.

[8].          Ibid.

[9].          M Fifield (Assistant Minister for Social Services) and S Morrison (Minister for Social Services), 2015 Budget to support NDIS roll-out, disability employment and carers, media release, 12 May 2015.

[10].       Ibid.

[11].       People with Disability Australia, 2015 Budget: modest but welcome measures for disability, media release, 12 May 2015. See also Australian Federation of Disability Organisations, Moderate budget promotes employment but leaves people with disability and family organisations in limbo, media release, 13 May 2015.

[12].       See Department of Employment (DoE), ‘Job Commitment Bonus for Young Australians’, DoE website.

[13].       For interim evalutions of the Youth Connections program see Danolopartners, Interim evaluation of the National Partnership on Youth Attainment and Transitions: a report for the Department of Education, Employment and Workplace Relations 2 April 2012, pp. 154–5 and Danolopartners, Second Interim Evaluation of the National Partnership on Youth Attainment and Transitions: a report for the Department of Education, Employment and Workplace Relations 21 December 2012, p. 46.

[14].       The Brotherhood of St Laurence (BSL), which has an ongoing campaign on the issue of unemployment, has been especially active in pushing for policy action on youth unemployment. See BSL, ‘Youth employment – My chance, our future’, BSL website.

[15].       For example, see: Organisation for Economic Cooperation and Development (OECD), Off to a good start? Jobs for youth, OECD, Paris, 2010; and International Labour Office, Increasing the employability of disadvantaged youth, Skills for Employment policy brief, ILO, Geneva, 2011.

[16].       For example, see: ProBono News, Jobs and employment strategies a good start, media release, 13 May 2015.

 

All online articles accessed May 2015. 

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