Here’s the text of a letter I’ve sent to the Fairfax papers in response to a report by Adele Horin on the National Welfare Rights Network’s survey of about 1300 Australians on what they think they would have to curtail spending on if they had to live on the Newstart Allowance.
The Federal Government’s response to the National Welfare Rights Network’s call for an increase in the unemployment benefit is, predictably, to reject this call on the grounds that the best way to help the unemployed is to help them to find work. This is humbug, for two reasons.
The first is that the unemployed are hindered, rather than helped, in their job seeking efforts by things such as undernourishment, lack of medical care, poor mental health, bad teeth, underspending on clothes and grooming, and unstable housing situations, which are all predictable consequences of having to live on the current level of unemployment benefit.
The second is that the Federal Treasurer is on record as claiming that an unemployment rate of 4.75 per cent – that is, about 500,000 people on the dole – is “consistent with full employment”.The result is that the unemployed are currently being crucified between two metaphorical thieves which have robbed modern Labor of its intellectual and moral fibre – on one side, economic policy orthodoxy based on neoliberal dogma concerning the supposed “non-accelerating inflation rate of unemployment”, and on the other, tabloid and focus group mythology about “dole bludgers”.
Discussion warmly encouraged.
P.S. The reference to the Federal Government’s response is based on ABC News Radio reports of statements by a spokesperson for Senator Chris Evans, Minister for Tertiary Education, Skills, Jobs and Workplace Relations.
Update: Peter Whiteford
Wonderful letter, Paul.
A good assessment Paul. Labor has shifted it’s focus to the upper middle class. Neither the Liberals or Labor find any need to pitch policy for the benefits of the working poor or unemployed.
The political interests of the working poor and the unemployed are not served by any of the major party, including those supposedly Trotsky-ite Greens.
I agree, an excellent letter.
Good work. What worries me most about all this is that it seems little effort is being directed towards the most problematic area – long-term unemployed. We hear that sometimes there are three generations of unemployed folk in Australia. In the absence of the serious investment needed to remedy this, the least that could be done is ensure that the fourth generation of unemployed won’t starve and/or become homeless.
All the help in the world will be for nothing if there are not enough jobs out there.
The best way to solve this, and to stop the disgraceful waste of our nation’s resources (not to mention the terrible social effects of mass unemployment), is to immediately implement a Job Guarantee scheme as developed by the Centre of Full Employment and Equity (CofFEE) at Newcastle Uni: http://e1.newcastle.edu.au/coffee/job_guarantee/JobGuarantee.cfm
Only one body has the ability to ensure full employment: the Federal Government. The fact that they have abrogated this responsibility for so long is tragic.
I strongly recommend Bill Mitchell’s blog for in depth discussion of macroeconomic realities and the implications for achieving full employment: http://bilbo.economicoutlook.net/blog/
nail, head Paul.
Great letter. Will buy the dead-tree issue today to see whether it’s printed.
When I started work the unemployment rate was about 1%, Menzies was in power and all the “reffos” were working two shifts. You could walk out the gate of one factory and into the gate of the next and change jobs in five minutes.
Now you need an email account, a CV, a resume and a degree in Horde(Horse?)Management as well as some smart clothes. Nice tits and teeth help if you are a female.
Oh yes it was a brave new world back then, the free market and Capitalism had triumphed over despotism and despair.
It was to be only a matter of time before the socialist revolution took over and we would all be free.
So what have we got?
Despotism rules in most of the globe.
Imperialism runs rampant.
The bees are dying
The fish are dying
The wildlife is dying
The water is polluted
The air is polluted
The climate is on the cusp of thermal runaway.
Sorry Pandora,Ben, Meg and Nell I will do my best to fix it before I go.
Huggy
It’s going to get worse too. Most of the supermarkets I go to now are hell bent on forcing me to use their self serve checkouts.
Where on earth are all the entry level or desperation (do this to avoid being on the dole) going to come from?
I’ve had my pay frozen for two years now. I’m looking down the barrel of another year of hours of unpaid overtime.
And I’m one of the lucky ones.
The ALP has failed it’s mandate to help those on the dole. We need a new government.
We need new solutions. Or we can keep up with the old one of blaming the unemployed for being that way.
These days the economy is our religion. Humans serve it, not the other way round. Rich powerful jerks like this arrangement.
Thats been the case for years, its not a new development. It helps the narrative that we serve the economy/free market tho.
Good one Paul.
I have a friend who did volunteer work for the WRN and when I add her experiences to my own, it would take a lot to convince me that our government’s treatment of the unemployed is motivated by anything other than an ideological obsession with making life as hard as possible for them.
Apropos Andos’s remarks above – Victor Quirk posts occasionaly on billy blog with extremely insightful comments on employment in Aus. and current Labour policy:
billy blog: guest blogger
jrbarch
As one who has in the last 12 months moved from a six figure salary to unemployment and back (my fault – no sympathy sought) I cannot understand how anyone could survive for any period on the (so quaintly entitled) ‘NewStart Allowance’.
Having said that the real issue (apart from making the ‘allowance’ something that could be lived on) is a complete review of welfare – particularly that old chestnut ‘middle class’ welfare.
But one example – why should my child attending the local comprehensive be required to justify the necessity for subsidised travel (the direct journey crossing a river) when those that choose a more ‘exclusive’ establishment are entitled without question or means test.
By all means complain about the level of one item (it is clearly justified) but change wont occur until we get a government that is prepared to implement a complete review without issuing bribes to the (non) ‘battlers’.
Almost everyone would agree that trying to live on unemployment benefits would be very, very hard. So, if, after having applied that particular blowtorch to the feet of the unemployed they still haven’t found a job after 6 months, I think it should be the government’s responsibility to supply a job at the basic wage. There are lots of things that need doing.
“Most of the supermarkets I go to now are hell bent on forcing me to use their self serve checkouts.” But why would you ever go into one? One of the many reasons to avoid them is that it is vulgar to stand in a queue, but now they want you to do their work for them?
dj, I don’t think it’s the government that’s primarily at fault here. Between the tabloids and the voters I don’t know that they’ve got the confidence to do anything useful about it. People consistently vote against their own interests on this one, which makes it quite hard to push the system towards decency.
One huge advantage of a decent dole payment would be the pressure it would put on the worst employers. I think it would be good that many people would get the choice between surviving on the dole or taking the same money to get jerked around by a string of casual employers. Of course, those employers would cry poor (but wait, the retailers are already doing that), and demand their legislative advantages back.
The other thing is that the benefit is so low that it actively works against anyone looking for work. How can you afford to look halfway decent, drive or use public transport to a job interview, buy a newspaper or use a computer to search for work? It’s ridiculous, but apparently unemployed people are the undeserving poor, so we we can torture them with impunity.
If we have full employment, Mr, Swan, than it’s hardly the fault of someone who’s unemployed if they can’t find a job. Why punish them?
People also forget that when it was easier to live on the dole (albeit it was never easy), a great many artists, musicians and writers financed their work by means of the Fraser/Hawke/Keating Scholarship. Now, it seems the only worthwhile thing a person can do is have paid employment.
I’ve lived on Newstart Allowance (I had cancer at the time, but that doesn’t qualify you for disability benefits if you’re expected to get better within two years) and it was extremely difficult – I got through by being so sick that I didn’t get out of bed, turn on the lights or eat for days on end, thereby being able to afford rent (and this was before the big rental squeeze of the last 5 years or so). Centrelink is basically a punitive organisation and an incompetent one at that. I would strongly support two payments – a payment that covers accommodation and a living allowance on top of that. If they have to start punishing people, at least don’t make them homeless.
Nor should it be forgot it was Doug Cameron, A Labor Minister, who coined the term ‘dole bludger.’ The tabloids then took it up with glee.
Its not just the ridiculously low payment – its the continual harassment (which is government policy, either Lib or Lab) one is subjected to bt Centrelink, the sheer nastiness of some Centrelink staff to the unemployed (even under Fraser and Keating), the practice of breaching, which I think still exists, which can leave an unemployed person homeles, destitute and starving.
And as for expecting any of the current crop of leaders having the moral courage to do anything about it, Greens excepted) forget it. They are unprincipled moral pygmies. (With apologies tp pygmies.)
See thats bloody ridiculous.
I’m appalled you had to go through that.
The fact that people don’t get disability benefits if they have cancer but are expected to recover within 2 years says as much about the welfare system as anything else written here.
The current settings are such that there is every incentive for people to try and move on to the disability allowance – the numbers have been ballooning for years
PB #18, I think you mean Clyde Cameron (a minister in the Whitlam Government) rather than Doug.
Paul @18: Do you mean Clive Cameron, a minister in the Whitlam government? To my knowledge, (Senator) Doug Cameron has yet to become a minister.
Like Huggybunny, I can remember when an unemployment rate of almost 5% (measured much more realistically, I might add) would have been enough to bring down a government. (It never happened until this mad boosting of The Markets, and all the other neoliberal claptrap that goes with it.)
The last time I had to manage on the dole was about 6 years ago, when I was between contracts for a few months over Christmas, and I don’t know how people do it for extended periods.
I respect your posts Paul, but you at least need to engage with the empirical evidence about the impact of high unemployment benefit replacement rates on unemployment rates. As much as it pains those on the left to admit it, incentives to supply labour do matter. You can make unemployment benefit payments more generous, but that change would then need to be accompanied by offsetting changes – limiting the length of time that people can access benefits at higher replacement rates, and making greater use of in-work benefits to make sure that effective marginal tax rates for prospective low-income workers aren’t too high. The labour market isn’t some sort of magic pudding where you can raise wages for low income workers and increase the generosity of unemployment benefits without their being some blow-back on employment levels.
With regard to the NAIRU, it is true that it is partially endogenous to the state of the economy. However, the nexus between prevailing wage rates for low-skill and inexperienced workers, incentives provided by the tax-transfer system and the education system does mean that their are levels of labour utilisation below which inflation pressures increase. You might say that you would be happy with higher rates of domestic inflation. But at some point actual unemployment (or GDP) has to be brought into line with some measure of potential, otherwise you get ever increasing rates of inflation.
It is fine to be concerned about current levels of unemployment in Australia. But you have to think pretty carefully about the structural factors that underpin unemployment patterns and come up with policies that alter those structural factors. Raising benefit levels feels like it makes sense from a distributional perspective (just as large increases in minimum wages do) but you have to be careful you don’t end up with policies that leave even more people out of work.
Let me make this point a little differently. The Australian left often looks to Scandanavian countries as a model for what a fairer Australia might look like. That is fair enough, but look closely and you will find that their tax-transfer system and wage-setting mechanisms (usually characterised by the term flexicurity) differ considerably from what progressives in Australia are advocating (there is a great deal more labour market flexibility). In a sense you have a choice – if you want more generous benefits but don’t want higher unemployment, you need to accept a highly flexible labour market and transfers that preserve work incentives. If you don’t want to accept that greater flexibility then I’m afraid you will make unemployment worse not better. How “moral” is that?
LO #24 (and also #25 which crossed with this comment), thanks for the constructive comment. My short reply is that there is a limit to the number of issues one can engage with in a letter to the SMH and the Age (or any daily paper) and still expect to have the letter published. My long reply is that the issues you raise deserve a careful and considered response which I don’t have to hand right away.
My medium length reply is to ask your opinion on a couple of specific points. The proposal by the National Welfare Rights Network for a $50pw increase in unemployment benefits is reportedly in line with a recommendation in the Henry Tax Review. The Henry Review also called for a large increase in the tax-free threshold, partly in order to redress the disincentives in the current tax-transfer system. What effect do you think the implementation of these two measures would have?
Absolutely agree. I think well-designed policies to make the transition to a low-carbon, if not decarbonised economy, could play a significant role here.
“It is fine to be concerned about current levels of unemployment in Australia. But you have to think pretty carefully about the structural factors that underpin unemployment patterns and come up with policies that alter those structural factors. Raising benefit levels feels like it makes sense from a distributional perspective (just as large increases in minimum wages do) but you have to be careful you don’t end up with policies that leave even more people out of work.”
The psuedo left’s response in a nutshell.Only Tony Abbott could have said it better.
I bloody despair.
Philisophically the Labor Party is primarily about getting people into work and keeping them in work, not about supporting people to stay out of work. They try to deliver welfare through the wages system, such as with the introduction of maternity leave, rather than direct handouts to people and thru the social wage. I do not know what the Newstart Allowance is but it probably should be higher if people are living in poverty, however there are a wide range of services provided to people in need, but I believe it is better for people to live in work than off welfare.
So, Labor Outsider, that’s all very nice and reasonable and economically rational. But, how do you expect anyone to live with any dignity on the dole? Have a look at lilacsigil’s comment, for example. Yes, one does despair about Labor if that’s their reaction to the issue.
I do mean Clyvee Cameron. Sincere apologies to Doug Cameron, whom I admire immensely. The term dole bludger was coined c. 1974.
This recent article by Peter Whiteford is pertinent to this debate.
“Philisophically the Labor Party is primarily about getting people into work and keeping them in work”
True. The rest? There has never been full employment under any government. If we are going to use the same economic arguments as the Tory’s to achieve full employment and a sustainable economy, one might ask what are the Labor party for? Saving Whales mayhaps.
He’s right of course, Paul, but this Government is too bloody scared of the fuss Abbott and his troglodytes would make. After all it was Howard and his mean-minded black0hearted minions who decided it was the unemployed should be treated like the undeserving poor engaging in “inappropriate” behaviour.
It isn’t particularly surprising that the replacement ratio in Australia has declined over time given that benefits are indexed to inflation rather than wages.
Paul, to answer your questions I have no problem at all with a $50 a week increase in unemployment benefits. Even with such an increase the UB replacement rate in Australia would remain quite low and I agree that there is floor in income below which it isn’t reasonable to expect someone to get by on. On the other Henry Review recommendation, IMHO it is a no-brainer. It is widely known that the interaction between the tax and transfer systems in Australia generate kinks in effective tax rates that act as a significant disincentive to supply additional labour. I can’t tell you how depressing it is that Labor wasted so much political capital on the mining tax rather than reforming the tax and welfare systems to work better for the poor and vulnerable. The worst thing about it is that Swan campaigned for years before becoming Treasurer that making work pay should be a Labor priority.
PJ, you can throw around glib comments about my view being akin to that of Abbott’s but how about engaging constructively with my actual post? Tony Abbott and the Liberal Party more generally do not favour flexicurity arrangements. Indeed, they had an opportunity when they pushed through WorkChoices to offset the adverse distributional consequences through reforms to Australia’s tax transfer system and flubbed it.
P.J. @ 32,
Labor introduced a policy of full employment as part of post war reconstruction. When unemployment benefits were first brought in (i think it was 1946, but about that time, anyway, there were 2 repeat 2 people receiving them in the whole of Australia. Curtin and Chifley also created the Commonwealth Employment Service, which Howard and Abbott destroyed, placing responsibility for job seeking in the hands of private industry and the sole decision to grant USB (Newstart) in the hands of a punitive Centrelink. They even changed SS’s name to try and pretend we no longer had anything like social security in Australia. Full employment lasted till about 1974 in Australia. Governments could lose office if unemployment reached 2%.
Oh, and as proof for my last sentence, if it hadn’t been for their preference deal with the DLP, the Coalition would have been out on their ear in 1963 because of the effects of the Credit Squeeze imposed by Menzies and company.
My first job out of school was working in a CES office while I studied at uni part time. Howard didn’t invent mutual obligation, Keating did as part of the Working Nation reforms that followed the early 1990s recession. Labor didn’t call its programs work for the dole and made less of a fuss about breaching people that didn’t conform with their obligations, but similar programs were in place nonetheless. Of course, under Working Nation, the labour market program component was also more generous and the obligation component was less stringently enforced.
Yeah, the ALP sent you to programmes thsat would make you ‘job-ready.’ Being job ready meant you were required create a CV, buy a second-hand suit, have a haircut, polish your shoes and absorb the philosophies of Ayn Rand and Dale Carnegie. Seriously. It happened here in Armidale.I walked out in disgust.
Unemployment is the WORST buffer stock for absorbing inflation. The skills of the stock degrade rapidly and extreme social dislocation is embedded in families and communities.
A Job Guarantee scheme would provide an inflation absorbing buffer stock while allowing people to maintain their income and avoid becoming destitute, while undertaking real on-the-job training.
Seriously, I’m sick of people arguing that we need to have X unemployed people because it’s the only way to prevent inflation. It’s just a neo-liberal lie.
Right on schedule, the latest post from Bill Mitchell:
Employment guarantees are better than income guarantees
http://bilbo.economicoutlook.net/blog/?p=13025
The really frightening thing is the tenor of the comments on Horin’s article in the online version. Downward envy doesn’t appear to have abated one jot since the demise of the Howard regime.
LO I moved interstate at the end of the Keating era, and when I arrived in the area sought out a REAP project that was in an area of work I wanted to get into.
It was a 6 month program and in the middle of it the Howard govt came in. That program was very different from the Howard era stuff by the sound of it. It was very effective.
I learned alot of skills, made many contacts and it lead to years of work. I’ve been unemployed on and off now for ages, more than 2 years. I did the same thing wrt to a work for dole project, chased one up after being unemployed for a few months, and it was garbage in comparison.
Cos I got off my arse and chased it up I got to organise what I wanted to do and had some control over the process.
But the impression I get from many of the other projects is that basically its a no wage labour force.
Andos @5
In many ways that appears to be what WFD is all about, only its got the cost benefit of not paying proper wages and benefits.
“PJ, you can throw around glib comments about my view being akin to that of Abbott’s but how about engaging constructively with my actual post? Tony Abbott and the Liberal Party more generally do not favour flexicurity arrangements. Indeed, they had an opportunity when they pushed through Work Choices to offset the adverse distributional consequences through reforms to Australia’s tax transfer system and flubbed it.”
Glib please.? Your comments are straight out of the Liberal party capitalist manifesto.Talk of economic rationalisation and other buzz words to the average stiff struggling on the dole, means nothing.:One persons pay rise is another persons job rah rah rah, we’ve heard it all before.
The economy especially in a country like Australia with the resources we have, should be structured to see anyone that falls onto hard times and out of work, be allowed to live their life with some dignity.This is the mandate the Labor party is given by its supporters to achieve with in the capitalist system. I for one do not want to see the type of social welfare system that they have in the U.S.
As for Tony Abbott “flubbing” flexicurity arrangements,his whole M.O. in relation to work choices was to cut wages, on the alter of the usual Tory party mantra, that less wages means more jobs. Tony Abbott could care less about the unemployed.
Paul, I hate to be pedantic but 2% is not full employment, and I do not believe there were only two people receiving social welfare at any time in our history. But I do agree with all of your comments otherwise.I am a child of the fifties, I am well aware of the history of the conservative attitude to social welfare.I have no doubt if Howard had got his way, he would have turned it all over over to the religious charities. A tambourine may have been a pre requisite to get a meal.
I recall listening to a discussion on radio with Chris Caton, at that time one of the heavies at Bankers Trust. I think he is still around but I’m not sure in what guise Bankers Trust exists today. However the major point Chris Caton was emphasising at that time was that capital in Australia required an unemployment rate of around 8 per cent to maintain profitability. The rate crept a little higher but his point was odious then and his stand for liberalist viewpoints just as bad. I’m sure that the Federal Opposition wouldn’t mind an unemployment rate of that nature today – it makes workers more docile doesn’t it?
When I read the article referred to in the media today I smelt a dead cat being thrown into the ring and still do, even taking into account valid points which have been made above..
P.J @ 43,
Its a while since I’ve read it, and I no longer have a copy on my bookshelf (moved on to another area of history) but I think the stats for 2 people receiving USB is in Paul Hasluck’s history of the WW2 Home Front. It was the first year unemployment benefits were introduced. (So it must have been earlier than 1946, during the latter part of WW2 anyway.
2% or less was negligable. As others have observed, you could leave one job in the morning and start another the afternoon of the same day. You always went to the CES because they would find you a choice of jobs within 3 minutes, no interview with CES staff, just a referral slip. And one always got the job one went for.
2% or less was negligable. As others have observed, you could leave one job in the morning and start another the afternoon of the same day. You always went to the CES because they would find you a choice of jobs within 3 minutes, no interview with CES staff, just a referral slip. And one always got the job one went for.”
To a great extent that was dependent in the state you lived.
But be that as it may, the great manufacturing white goods state like South Australia, has at times had high un-employment when states like W.A. couldn’t find workers. A debate for another time.
Anyway I’m done with this.The un-employed are treated like other welfare recipients in this country like lepers of late, and contrary to what most believe the pragmatic Julia(to my dismay)is going to be dumped shortly. She is cut from the same cloth as our Mr Abbott.Sad she offered so much.They were going to change the culture of the bastardy of this particular debate, and have done nothing.
I hope Shorten can do better.
Society owes the unemployed a decent living standard. If Government wanted to it could reduce unemployment to tiny levels.
As Mediatracker said, keeping a pool of unemployed keeps wages down. Some people will always be unemployable at any level of social services funding let alone current low levels.
So, our society has deemed that it makes sense financially if not morally to have a certain level of unemployed so why not give these people a decent living so they at least don’t need to steal or feel like lepers. They are providing a valuable contribution to our neoliberal society.
And stop harassing them via centrelink to get jobs they don’t want, employers don’t want them for or aren’t ever available anyway.
If you are aged 58and female you are deemed to be unemployable. This I know because I receive newstart but all the paperwork describes me as being in receipt of a “widows” whatever.This means that I do not have to attend the often onerous compliance that others are required to comply with.In other words, they know full well that I will not be able to get a job given my lack of youth.In other words they have given up on me, but expect me to somehow survive on bugger all.They do SFA to help me to adjust to my newly found poverty and even less to help me to find employment.That a Labor Govt. would sanction the demonisation of the unemployed and use punitive measures to punish even us old sheilas shows how far the ALP have moved away from their core values and beliefs.
Julia wants to encourage people to get a job and the best way to do it, she thinks, is to completely strip them of their self worth, until there seems to be no alternative but to wake up one morning and decide to get a job–any job. (Working for an unscrupulous arsehole is in her mind better than not working at all.)
The so-called dignity of work merely translates to the dignity of having money and not having to ‘beg’(or be on the dole) (a fate worse than death in many people’s minds).
She has said she doesn’t want to raise the Newstart Allowance, because she wants people to get a job. Simple and as callous as that.
She has no fucking idea, no clues, and no imagination in most areas. A bureaucrat who’d probably do well running the PR department of some large multinational.
Julia is in a class of people who regard the unemployed, with contempt primarily because they themselves are covertly lazy fuckers and if it weren’t for their lack of imagination, their fear and their need to keep up with Jones’s, (which keeps them slaving away leading dreary dreary lives of quiet desperation), they’d really rather be doing nothing too–just like all those rotten dole bludgers.
Being poor is to be the lowest of low in our society as Australians traditionally despise the poor.
LO, as long as we rely on means tested benefits there will always be a point at which “incentives to supply labour” will be affected: that is, we’ll have high effective marginal tax rates (EMTRs). Exactly how high and for which groups of people will depend on how much we let people earn before withdrawing benefits and how we manipulate the rate of withdrawal. We can tinker so as to find a system we think is more or less equitable, or more or less costly to government, but we won’t, in a means-tested system, abolish high EMTRs altogether.
And don’t make reference to other people’s “glib” comments when your own comments @ 34 more or less disqualify your comments @ 24. The latter seem “glib” in the light of your more considered comments @ 34.
BTW, Keating instituted reciprocal obligation, not mutual obligation, the idea being that if we were demanding a lot of the unemployed by way of job search requirements etc the government should make a commitment to finding them work or at least re-training them. Howard’s mutual obligation seemed to consist of saying that if anyone were receiving a taxpayer-funded welfare payment then they should be jumping through hoops to repay the favour, including working for their dole
LO @ 37, PB @ 38, I stopped voting ALP after we elected Hawke for the first time, largely because Hawke, Keating, and the rest of that government had betrayed the working class. They stopped being the Labor Party.
DI (nr),
Yeah, I know. Ayn Rand, FFS. And what’s worse, she’s unreadable.
Not quite true, PB. I actually managed to struggle though a couple of her books about 45 years ago. She’s certainly incoherent, though. Several weeks I’ll never get back.
I agree with you that the worst Labor govt is better than any coalition govt, but, since Whitlam and (locally) Dunstan, only just.
I am now 55 and (fortunately) have always been self employed. This was a great letter and reflects my disillusionment with the ALP. I grew up as a left-leaner and could never imagine not voting Labor. I have now not given them a vote in at least 10 years. It is glib to say that there is no difference between the LNP and ALP, but it is heart breaking to not have a true social conscience ALP any more, especially since they are in Govt for the time being. But fuck me, what is the alternative going to be like?
Jaded, disillusioned and, quite frankly, lost.
Robbo as a 58 year old you could be on Newstart and required to do volunteering work to justify the dole. Your unpaid volunteering labour would then benefit the new generaton of highly paid social entrepreneurs extracting profit from government grants.
If you were a little younger you would be activated by having to get a job. As with all unemployed on Newstart, you would be be churned through a succession of positions that are good jobs split, casualised, into many short term temproray jobs with collaborating employers, each little short term job attracting a government fee for a Job Service provider. Labour are as captive of the employment services industry as the Coalition were. The unemployed are just the stock being churned through the Job Services industry. If the unemployed got permanent jobs the industry would lose their stock.
As a 26yo my son, who had been working and saving since leaving school, was made redundant two years ago. Now 28, he has no savings and has only had occasional casual work in that time.
I am grateful for every day he calls because it means he is still alive. And yes, he has become that depressed.
Hope springs eternal, but not necessarily when dealing with Centrelink when one is suicidally depressed!
Paul Burns @18, Doug Cameron wasn’t elected until 2007, so it couldn’t have been him who coined the term “dole bludgers”. and Clyde Cameron would have been the last person to use that term after his first-hand experience of unemployment during the depression.
As I remember, it was the Fraser government which first used the term after it gained power and so many people were thrown out of work.
They used it to deflect rightful rage from them onto the poor sods they’d thrown on the unemployment scrapheap.
The Whitlam government had copped a lot of flack from the likes of Liberal Senator Bert Kelly for making the lot of the unemployed a bit better; and I believe it was in fact Kelly who first used that abusive term. Not bad for a silvertail who’d never had a day’s hardship in his life!
Anthony, I’d regard all of my comments as considered – my first post was simply to remind people that changing benefits can affect incentives – it was not about the impact of a $50 increase per se.
There is a long labour market literature on how poorly designed tax and welfare policies can reduce labour supply incentives and raise unemployment. Small changes in benefits aren’t going to make a big difference to incentives, but then small changes in benefits also aren’t going to do a lot to change the material living standards of unemployed people. What I was getting at is that it is possible to design a system that raises benefits by much more than $50 a week, as long as it is accompanied by other changes that preserve work incentives and increase labour market flexibility. The Scandanavian countries show how that can be done somewhat succesfully. While it is true that means tested benefits put upward pressure on EMTRs, there are policies that can be put in place to ensure that EMTRs aren’t large enough to act as a strong disincentive to supply labour.
As for Working Nation, in practice reciprocal obligation worked very similarly to mutual obligation.The “commitment” to find people work wasn’t particularly strong and large numbers of long-term unemployed were simply churned through what were often uselss labour market programmes (if the objective was getting the LTU job-ready). Departmental evaluation of the impact of many Keating labour market programmes was not positive. The model for Working Nation was supposed to be the labour market programmes that were prevalent in Scandanavian countries at the time, but unfortunately what was rolled out in Australia wasn’t as well designed. Another way of putting all of this is that under Working Nation, a lot of LTU were “working for the dole”, it is just that the government didn’t labelled it a labour market programme. Under Howard, much of the same infrastructure was kept, though the more expensive labour market programmes were gutted and the CES was privatised (and opened up to more competition). LTU still had case managers whose core responsibility was get them off of benefits.
In our discussion we should not forget the underemployed. The definition of ‘being employed’ is so narrowly cast people who only worked one hour in the previous week are counted as employed.
There were 811,600 underemployed workers in 2009.
http://www.abs.gov.au/AUSSTATS/abs@.nsf/Latestproducts/6265.0Main%20Features3Sep%202009?opendocument&tabname=Summary&prodno=6265.0&issue=Sep%202009&num=&view=
“but then small changes in benefits also aren’t going to do a lot to change the material living standards of unemployed people.”
Actually, I would think that, say, $100 a week, would make a huge difference if you went from $234 to $334.
It’s also not clear to me that it really would affect unemployment much either, as I doubt too many people are really going to want live even on $334 per week for long (it would be interesting to know what the function is really like).
Here we learn that:
“The ALP is financially bankrupt because the unemployed are intellectually and morally bankrupt”.
Think I got that right.
Poor lillies. Now we know the real reason for all the shonky privatisations; they starve if they dont kick backs from the developers?
Another crime down to the undeserving poor that Abbott would just love to get his claws into, given his performance as a social security minister earlier in the century.
They are undeserving because they are unemployed or unemployed because they are undeserving?
Scurvy rogues, they are…
Now, how do I bring a point up without being crucified as a bogan?
Noone in the comments brought up the reality of large amounts of unskilled labor being imported into the country, while the local hapless look on?
Do I begrudge someone from a poorer country the opportunity to come and shit kick for a few bob for their poor families back home?
No.
What’d I’d say is, though, if you are not going to allow the local unemployed fair access to work, then equity demands you pay them a fair dole (are you reading this, LO?).
jane,
Clyde Cameron coined the teerm around the same time as he coined ‘fat cats’ if I’m not mistaken. I remember I was struck at the time that a Labor Minister could talk like that about the unemployed. I’ve already admitted I was wrong to say it was Doug Cameron. (It was at the time on the front page of the Tele or Mirror. The gutter press loved it.)
Back in the early eighties, before the election of the Hawke Government, the was a junior liberal MP who loved demonising the Dole Bludgers and asserted that the UB was too high.
To prove this he tried to live on said benefit for 2? weeks.
At the end of it he had totally reversed his position.
Anyone else remember this?
Unemployment is not about incentives. People aren’t motivated to work because of incentives. At the level of survival, i.e. for the proverbial bread they may be motivated to work, but that’s work as slavery. Any view of modern society which tries to incorporate this concept into it is highly dubious.
Unemployment should be seen in terms of the economy and jobs available. Not only is technology reducing the need for human labor, but globalization is making industrial production globally mobile. At the moment it is moving to parts of Asia and Eastern Europe, away from countries like Australia. From a right wing Labor point of view, it should be obvious that this effects not only the financial markets. It also has an effect on jobs, education and social culture. In particular, a lack of industrial jobs means that for example there is no longer a need to educate particular occupations here in Australia. This isn’t the Blacksmith argument, this is as significant as shop workers, but also the consulting businesses associated with industry, IT, electronics, etc. etc.
It’s a very complicated issue… The significant point is that globalisation as trade liberalisation and global capitalism is having a significant effect on the ability of people to be political and form political groups with defined boundaries and agendas.
This discussion is also not complete without mentioning income equality. Entrepreneurs, corporation executives, entertainers, professional sports people are all earning high incomes, not because these incomes are in any way in relation to the contribution that they make to society, but because the market is valuing their scarcity. And not as a factor of their ability, but only in respect to their necessary scarcity. Why isn’t competition to be a CEO, or a sportsman driving their earnings down? 30 years ago top executives in UK banking were earning 85K. But we can’t afford a decent standard of living for the unemployed!
Anyway, in particular this issue will only change through violent protest. Group protest is probably not possible due to the geographic distribution etc. so it will be up to a radical group of individuals. And so it goes. Behind all the talk of tolerance and pluralism we have ended up in Australia where the only thing people understand is power. Look at the sort of pathetic individuals you find in NSW Labor. They would not be out of place in organised crime.
Conrad, I wouldn’t call $100 a week small as it represents a 40% odd increase in income. I’d start to get concerned if increases were as large as that (unless accompanied by other reforms) because then you start getting into the realm of much higher replacement rates and therefore implicitly much higher participation tax rates. I’m not sure I’ve seen any evidence that non-linearities in the effect of changes in PTRs on labour supply are large. However, it would be an interesting empirical project to investigate that proposition in detail.
Joe, how can you say unemployment is not about incentives when there is a mountain of empirical research that suggests that labour supply incentives do effect unemployment rates? Unemployment is not ONLY about incentives but that isn’t the same thing as saying that incentives don’t matter.
LO, please explain to me how incentives are important, when you decide to learn to be a plumber, or study speech therapy? Explain to me what you mean by incentives?
I respect the fact that you have spent a lot of time thinking about this issue and are giving an expert opinion in good faith, but I think any understanding of work separated from it’s culture context and abstracted to a market model is significantly lacking.
Every Australian deserves to be able to take part in the national culture until that is not affordable. The economy has to be able to afford that right.
Well said Joe.
The term ‘bludger” has been in common usage in Australia since the 19th century. The first recorded usage of it in conjunction with ‘dole’ was apparently in an article in the Bulletin in 1976.
http://www.anu.edu.au/andc/ozwords/December%202001/Bludger.html
Sure 5% unemployment is a pretty cruel and unpleasant life for those affected. I think we should also acknowledge that if the macro-economic settings predict/expect 5% unemployment why do we set the benefits below the poverty level?
That’s just cruel isn’t it?
Inviting many unpleasant consequences.
And a bit of joke considering that if we too many actually get a job the RB will raise interest rates again to spill jobs to prevent inflation. Let’s sacrifice those with at best marginal participation in our prosperity!
But 5% unemployment is not like it was because of the growth in part-time employment.
Now 5% unemployment means approx 40% under-utilisation of the total workforce. We have many working poor looking for increased hours and thus wages.
We should acknowledge we need to:
– raise the benefit above poverty
- lower our expectation of the NAIRU to account for under-utilisation. 3% unemployment?
Doug
“There is a long labour market literature on how poorly designed tax and welfare policies can reduce labour supply incentives and raise unemployment.”
You seem to be arguing here that under some policies, some people would choose to be unemployed. Is that right? Is so, I don’t have a problem with that, actually. Many people need time not working to decide what they’re doing with their lives. Many people could probably use their time more fruitfully doing stuff other than being employed. There are also people who are never going to be suited to regular employment and it’s much better not to hassle them. I think people have the right to decent living standards regardless of what they’re doing with themselves.
As an aside, isn’t it interesting how the “protestant work ethic” (that I’ll misleadingly summarise as “working is good, not working is not good”) is axiomatically accepted as a valid basis for examining employment issues?
Fine, maybe think about it this way. The majority of long-term unemployed aren’t out there living fruitful lives. Unemployment is a significant correlate with social exclusion (and not just because their incomes are low). Moreover, unemployment is more heavily concentrated amongst disadvantaged ethnic groups and has a particularly deleterious effect on children in jobless households. The term poverty trap describes a real phenomenon whereby in the broad sense and individual would be better off employed or not on welfare, but things like high effective tax rates for making employment transitions, or the fact that many low-skill people are priced out of the labour market by high minimum wages, effectively locks some people in to sub-optimal situations. I don’t like to use the term voluntary unemployment because it conjures up images of doll-bludgers, which is a mischaracterisation of the vast majority of unemployed people. It is politicians and policymakers that are ultimately responsible for undesirable joblessness because the laws and regulations they pass that explain most of it.
#68 LO it also correlates very strongly with mental illness and physical incapacitation/disability which brings up the other facet of late 90s early 2000s “unemployment” policy—the pushing of people onto the Disability Support Payment in favour of Newstart and its predecessors as a means of artificially reducing unemployment figures. And the simultaneous pressure to get people with disabilities into work of whatever kind.
Anyway to my mind the biggest question is Fine’s at #29;
Which isn’t primarily about money anyway, it’d make much greater difference to many many unemployed people’s lives if medium-level Centrelink policy were less about dicking with them.
Yes, LO I understand all this. But, we live in an age in which low paying unskilled jobs aren’t nearly as common as they used to be. People who made a living from being unskilled labourers, or hidden away in the bowels of the public service where they couldn’t do any harm don’t have those sorts of options. Some people aren’t suited to the modern post-industrial age. Many end up on disability support as Liam has pointed out, but others don’t. Instead, they’re persecuted by Centrelink.
One of the reasons they don’t lead fruitful lives is that we’ve set up a society which actively works against them having the chance to do so. That’s because we judge people on whether they have worthwhile employment and assume that it’s automatically better for them if they do. At the same time, we have an economy with 5% unemployment and find that acceptable. Someone has to bear the burden of being unemployed, so why do we make life so difficult for those who are? Sure, get all the training and support for people who want jobs and are capable of doing them. Put a particular effort into supporting people from marginalised groups. (And real training, not the wasteful bullshit that goes on in Centrelink these days) But, accept that there are other ways to live and build a society in which people have sufficient income and are treated with respect regardless of their circumstances.
OMG you are right Squirrels
Someone is stealing your life
How Ethical Is The Work ‘Ethic’?
What is Exploitation? (By Randolph Bourne)
more here
About 30 years ago when you got sick you immediately recieved sickness benefits unlike now when only some of those too sick to work can access Disability Pensions.
As “employment” is defined “as an hour of work, paid or unpaid, in the survey period”, the unemployment rate is artificially low. Economists often treble the official unemployment rate to get a more realistic figure. Labour market observers watch the trend in unemployment rate rather than the figure itself.
There are 7 qualified applicants for every vacancy in Victoria – that’s high unemployment.
Of course 56% of Newstart recipients have savings of less than $500 because you must wait for a week for each $500 you have in the bank when you apply for Newstart Allowance.
If Australia was realistic about its unemployment rate Australia would implement job creation programs rather than encourage more job losses.
Billie, the problem with DSP payments is that in practice, many of the people that went on to such benefits weren’t actually too sick to work. The benefit became a repository for people that the state had effectively given up on but shouldn’t have.
Fine @ 74:
“….accept that there are other ways to live and build a society in which people have sufficient income and are treated with respect regardless of their circumstances.”
here here fine…spot on…
also having someone use the term “incentives” a lot….LOL…nice old english conservative term that, stretching back to macmillan i think (the pound in your pocket)….and actually trying to present a rational and humanitarian position????….sigh…..pull the other one LO you are only fooling yourself.
Nice way of engaging with the arguments Eric. Call it what you will, but the net financial benefit from taking a job does affect the willingness of people to take jobs. Incentives matter whether you like it or not. The challenge for progressives is to use incentives toward progressive, rather than conservative ends.
LO what about the poor bastards who are too sick to work and forced to live on Newstart.
- They get $100 a week less, ie $234 instead of $334
- they don’t get a Health card
- they may have mobility problems requiring a taxi to get out of the house
- they need nutritious food to get better (oxymoron)
- they need to avoid stress to get better (oxymoron) and there is nothing like too many bills for your income to be a major stressor
Now perhaps you have never had the experience of a close friend or relative being too ill to work but the second time I did it was fortunate that the sick person had savings and a frugal lifestyle because they were denied even newstart allowance because they had formerly been a subcontractor.
@72
“It is politicians and policymakers that are ultimately responsible for undesirable joblessness because the laws and regulations they pass that explain most of it.”
And what about technological change? Is there any research that says that jobs lost in one sector due to new developments are always and at least equally offset by new opportunities created by new developments in other fields? Governments have very little scope to influence the way the business uses technology to lower bottom lines and raise dividends.
So the unemployed were rolling in it when the Coalition were in power?
It would help if we redefined productivity as
output per available man hr. (Available man hours are those people want to work – it includes the man hours that the unemployed and under employed would like to work.) This is the measure that tells us how well we are using the available man power resource – not just how well we are using those that have managed to keep a job.
Much of the productivity gains in the eighties and nineties came from redesigning jobs in a way that converted people of limited physical and mental ability from employable to unemployable.
Discussing productivity in these terms might just focus peoples minds on the real economic issue.
Part of the problem is that while the public good strongly supports the idea of minimizing unemployment by sharing the work it often makes more sense for a company to employ a limited number of people working above average hours. T
Part of the problem here is that employers gain by reducing the number of people while it is the taxpayer who has to pay the cost of unemployment in terms of the financial and social costs of having people unemployed.
Perhaps we should have a system where the cost of supporting the unemployed was paid for by a super tax on employers for each person who works longer than some target.
It might help focus employer minds on the real cost of their employment policies.
Cuppa @ 82,
No, but the Coalition didn’t enjoy kicking the shit out of the unemployed as much as Labor now do, as terrible as that sounds. Labor are the ones intending to roll out welfare quarantining nationwide just to make their lives even more unbearable than they already are.
The genius bureaucrats that came up with that idea no doubt live in areas which will be unlikely to see crime sky-rocket when Gillard/Macklin bring that in:
http://www.alp.org.au/federal-government/news/tony-abbott-announces-copycat-policy-on-welfare-re/
“the public good strongly supports the idea of minimizing unemployment by sharing the work ”
Lump of work fallacy.
No we don’t — it’s just that the low paying unskilled jobs have changed. Now there are oodles of crappy service jobs that didn’t used to exist. This change has disproportionately affected certain groups of men. Alternatively, there are some groups who are now employed that probably wouldn’t be otherwise. Given how high workforce participation rates are these days, surely the overall changes we have had are a net positive.
This article from the washington post is a must read on this issue:
Corporate America, paving a downward economic slide
[just found it on nakedcapitalism.]
Paul @62, Bert Kelly was responsible for coining that disgusting term of abuse “dole bludger”.
I would have staked my life that Clyde Cameron would not have coined the term, owing to his personal experience of unemployment during the Depression. It was completely out of character for him, but not for Kelly, a man who never suffered a day’s hardship in his life.
Marisan @63, it was the Liberal blowhard Edward St John. He made a huge production of it and was going to show all these dole bludgers living high on the hog, a thing or three.
He didn’t even last a week-couldn’t buy enough groceries to feed himself for the fortnight, let alone pay his share of the rent and utilities.
Slunk off with his tail between his legs, a generous coating of egg on his face and deservedly disappeared from politics.
@68, the link you provided jibes much more closely with my recollection of the first usage of the term dole bludger. As my memory serves me it was first used in 1976 after the election of the Fraser government and a huge number of people lost their jobs.
Marisan and jane I vaguely remember that.
Was he related to this Edward St John?
For a second i thought you were talking about the him, I thought “What? Nah!” but then it wouldn’t have surprised me that much cos he certainly seemed like a paradox.
jules @90, I can’t be sure that it is the St John who shot off his mouth in such a fashion. My memory is that he pulled the “dole bludger” stunt in the seventies, which would seem to rule him out. However, he also seems to be the only St John in politics at roughly the right time.
Curse my memory. I never thought it would be possible to forget his name! Anyone else remember the incident?
jane @ 89,et al.
Okay. I’ll stand corrected, quite willingly on my statement about Clyde Cameron. Was relying on a faulty memory, not research.
he blok
Another Liberal pollie who said he would live on the dole for a week was Tony Abbott. I distinctly recall that from a long ago item on TV news. (I remember thinking what a shit he was at the time.) So its no surprise he has the attitude to welfare that he has. He was trying to prove one could live comfortably on the dole (subtext – it was too high.)Transport costs, he argued, could be reduced by bicycling everywhere. Don’t know if he lasted the week.
Wow Paul, I don’t remember that but its definitely worth chasing up.
I do remember the stunt of a politician trying (and failing) to live on the dole, but I’m pretty sure it wasn’t St John. I can’t remember who it was though. I vaguely recall he had the good grace to concede it wasn’t possible.
DI(nr),94. it was Katter’s old man, back in the seventies.
LO @25, once again you are uncritically regurgitating economic orthodoxy. Read the PRIMARY literature on the effect of unemmployment RRs on unemployment levels and you’ll see just how wrong the “orthodox” wisdom among non-specialist economists is. Labour supply modelling is my professional speciality, so I know whereof I speak here.
High estimates for the elasticity of U wrt NRRs generally come from three sources: non-structural time series studies done in the 70s and 80s; European micro studies based on the “notch” when Unemployment Insurance expires and is replaced by less-generous Unemployment Assistance; and Real Business Cycle theorists in the US who are desperate to try and make reality fit their models.
The first are now recognised as suffering from severe endogeneity bias (basically, high unemployment causes more generous benefits, not the other way around – as you can currently see in the US with the extension of benefit periods, and as you can even see in the current Australin debate where people point to persistent unemployment as justifying “liveable” benefits). These studies tend to fail Grainger causality tests, for one thing.
The second approach was devastatingly critiqued by Atkinson and Micklewright in 1992. They pointed out that an awful lot of things other than payment rates change when UI expires. Savage joint income and (asset tests are imposed, stigma increases, payment conditionality massively increases (the last has since been addressed by imposing such conditionality on most European UI recipients too). The critique was so strong that no-one does these studies anymore.
The third approach utterly lacks credibility outside a small coterie of freshwater economists. To put it bluntly, their parameter estimates of these things seem to be basically pulled out of their arses.
Oh, and as a policy point, even if high RRs did cause higher unemployment, our RRs are almost universally LOW by historic and international standards. The government line on this is inded cant. That’s especially so among childless singles – the group people think of as undeservong and less needy “dole bludgers”.
My personal opinion is that anyone who looks at the current rate structure and is aware of the actual situation of most of those on Newstart will find the case for a rate rise – at least for childless singles – overwhelming.