From The Australia Institute’s ‘Between the Lines’:
The Australia Institute has recommended that the unemployment benefit be increased in line with community standards, which basically means providing for the unemployed as we do our pensioners and disabled. Another way of approaching this issue is to consider arrangements in other countries and how their unemployment benefits compare with their wages.
In Australia, when individuals on average weekly earnings lose their jobs and wind up on the dole, they will find that they replace only 24 per cent of their after-tax income. A worker on an average wage moves from an income of $1,196 a week to an NSA of $228 a week. A couple will receive $412 a week, but only if neither partner is working.
An international study (using a different definition of the average wage) suggests that single people in Australia who go on unemployment benefits replace 31 per cent of their income.
Of the 29 OECD countries in the study, none had a lower replacement rate for singles. The next lowest was Greece with a replacement rate of 36 per cent. In the UK, the replacement rate was 40 per cent, in the US 56 per cent, in Germany 59 per cent, while in France it was 66 per cent. However, if you become unemployed in Luxembourg, 87 per cent of your income is replaced. Just to keep pace with the average of the other 28 countries, Australia would require an increase in the dole of more than 80 per cent.
Thankfully, Australia no longer has the worst replacement rate when children are involved. For example, an Australian lone parent on average weekly earnings would replace 52 per cent of their income if they had to rely on unemployment benefits, a replacement rate that is better than in Turkey (40 per cent), in Greece (45 per cent) and in Korea (50 per cent). But the Australian replacement rate falls behind all of the other countries.
National averages in Australia can conceal a good deal. Someone on the retail-industry-average wage who loses their job will find that the dole replaces 31 per cent of their after-tax earnings. But someone in the mining industry on average earnings will replace only 15 per cent of their wage when they go on the dole. In between there is
• manufacturing at 26 per cent
• construction at 23 per cent
• finance and insurance at 20 per cent.
These are just a few examples. But they show dramatically that Australia’s dole is woefully inadequate when it comes to making up for the income that people used to earn before they lost their jobs.
I trust – although this is not entirely clear – that you’re comparing the replacement rate of Australia’s UB with the replacement rate of many countries unemployment insurance schemes. Thus the high overseas replacement rates you cite are dependent on the claimant being eligible for the scheme: an adequate record of contributions over time, say, or satisfying a certain weekly hours threshold and so on. (Similarly, the payment of such rates is often time limited). Most European countries have a secondary “fall back” scheme of payments for those who are not eligible: low, flat rate payments, usually called something like “social assistance”.
Australia’s UB scheme is not contributory, does not require a claimant to have a history of paid employment, is flat rate and unlimited in the duration of payments: in short, it is very much like a social assistance scheme, not a social insurance scheme. If you were to compare Australia’s UB payments to many European social assistance schemes, I wouldn’t be surprised if Australia’s rates look comparable or even relatively generous.
Having said that, I support the call to harmonise UB payments with pensions. Even within a social assistance type scheme, I can’t quite see a justification for differential payment rates.
Apologies for the long response:
Let me start by saying that I totally agree that unemployment benefits should be increased significantly, and I also think that we need to think about the indexation of unemployment benefits to wages and not just prices, as in the long run if you index only to prices you end up completely unrealistic levels of benefits. (As an aside if we had only indexed the age pension to prices for the last 35 years then age pensioners would be receiving about $140 a week or about half the level they received before the recent pension increase.) We also have to think seriously about how we help those in the private rental market, where the level of rental assistance is clearly inadequate.
But some of the comparisons in this piece by the Australia Institute are incomplete in important respects. This is because most other OECD countries have social insurance systems – this means that not only do you have to pay higher taxes to finance these benefit levels, but people have to have already paid the social insurance contributions to get them.
In the US and Japan, and even in lots of European countries – including Germany and the Netherlands – fewer than half the unemployed actually receive unemployment insurance benefits, but instead they receive assistance benefits, which are a lot more like Australia’s benefit system. This is either because they didn’t satisfy the initial contribution requirements or they have been long-term unemployed and exhausted their insurance.
In general the sort of people who do relatively well out of social insurance are middle class people who lose their jobs, but the sort of people who do better in social assistance schemes like Australia’s are the low paid and the long-term unemployed. For example, only 11 OECD countries pay unemployment benefits to young people who do not have contribution histories, so for this group Australia is actually the sixth most generous in the OECD. This doesn’t mean that what we pay is adequate, just that most other countries are actually less adequate. It also has its own problems for incentives, but this is hardly a problem in current circumstances.
We also need to compare benefits to the minimum wage and not only the average wage, since in general terms the unemployed are drawn more from low wage workers rather than average and higher wage workers – although in a recession a lot of middle income groups are potentially drawn into the benefit system.
While benefits for middle and higher income groups (and for the unemployed partners of workers) are thus much lower in Australia than in many countries, the situation for low paid workers and those without contribution histories is more mixed.
Most lone parents and couples with children would also be a better off in the Australian system because our social assistance and family benefits for families with children are actually relatively high if you compare benefit levels to GDP per capita or median household incomes rather than average wages. The reason for using these measures rather than wages is that Australia tends to have high wages precisly because we don’t have large social security contributions paid by employers.
As I said, I entirely agree that unemployment benefits and rental assistance need to be increased – its just that international comparisons of replacement rates are not a good justification for this.
More on unemployment benefits: Why are we so mean to the unemployed?
Great comment Peter, really good appreciation of the issues involved.
One of the reasons governments of every colour are so mean to the unemployed is because they are terrified current affairs programmes will start screaming that government is supporting ‘dole bludgers.’ The term of course is obnoxious in the extreme. And, more to the point it was dreamy up by a Labor Minister for Labour and National Service, Clyde cameron, during the Whitlam years. (He also came up with ‘fat cats’ but I don’t mind that.
I didn’t ralise Clyde Cameron coined “dole bludger”, Paul. I though it came out of the Fraser Years.
To be fair to Clyde , though, he wasn’t too far off the mark. When unemployment was something like 2%, some of us would quite often take a few months’ break from work. The benefit was $17/week, which was actually quite generous if you were living in a share house.
Compared to average wages? There seems to be some confusion as to the point of unemployment benefits here – there certainity not supposed to ensure there is no financial penalty for not working.
The financial penalty is, after all, the “incentive” to achieve, pay taxes etc. The “incentive” just needs to balanced against human dignity (i.e. some kind of povery line analysis perhaps).
Simplistic comparisons to average wages (or indeed to pensions levels, where no incentive issue arises) tell us nothing about if we have the balance right.
One reason for aged and disability pensions being higher than the unemployment benefit is that the former is design to support people for long periods of time, often the rest of their life, whereas the latter is for supporting people temporarily between jobs.
Paul Burns,
Clyde Cameron was Minister for Labour, not Labour and National Service. The Whitlam Government abolished National Service (Vietnam and all that.) The last Minister for Labour and National Service was, I think, Phil Lynch in the McMahon Government.
Ditto all comments about unemployment insurance. It’s apples and oranges.
What a terrific bunch of comments. Need to compare apples and oranges, pensions are different, need for incentives, the average wage is a stupid comparison, etc.
Thought I’d stumbled by mistake into Catallaxy for a moment.
No need for me here, carry on folks, you’re on the right track.
Wait until privatisation is in full gear there in QLD. Then you will see the cold face of this. Will not be pretty.
Chris@9, to be consistent, to aged and disability pensions you should add sole parents pension. In the 1940s it was expected that the the widow and the invalid should be paid to keep out of the workforce for “often the rest of their life”. Similarly, in the 1940s unemployment was overwhelmingly short term and frictional. I don’t think either of these hold true to today.
Clearly, the comparison should be with the minimum wage.
Anthony @ 12 – I’d agree with sole parents pensions, but they should be higher anyway because they need to provide for 2 people not one. For the really long term unemployed then perhaps some subsidies for replacement of high cost items like fridges, washing machines etc could be considered. And perhaps also CDEP like schemes.
FDB @ 13 – depends on what the point is you’re trying to make
I should say though, that the minimum wage should itself be compared with the mean to get a proper picture.
But ultimately, it’s so obvious that the main comparison should be between working and not working. Or am I expected to have more sympathy for someone who’s lost a good job than a crap one? They’re both just as fucked in income terms, and the former will have assets as backup.
The current level on unemployment benefits is too low. You can’t access unemployment benefits until you are down to your last $500 which makes paying car rego, or insurance problematic – for Australians outside inner urban areas a car is a necessity. The level of benefits is insufficient afford nutritious food if you have paid $160 for rent, $50 for utilities [I have no idea what rent subsidy is]
Centrelink micromanages its clients affairs which I think destroys initiative, pride and builds dependence.
Newstart Allowance is too low for short term unemployed, the corrosive effect of grinding long term poverty can only be imagined by those who aren’t subjected to it and clearly contributes to generational welfare dependence.
I am appalled that sick people [who used to get a sickness benefit] are placed on Newstart and I wonder how they can get better.
Australia’s current employment and immigration policies are going to increase the numbers of long term unemployed who will heave a sigh of relief when they reach 67 and can live more easily on the aged pension.
I think that a clear eyed survey of the demographics of Australia’s 1.25 million long term unemployed will show
- former factory workers who have been retrenched
- children formerly destined to factory work
- people over age 45 who formerly were professional or sales
- graduates from ethnic backgrounds
- perhaps a dole bludging surfer
The media blames the individual yet 1 in 8 adults rely on the government for income support so I think its time to blame the elected government for not providing the social conditions for full employment
“Australia’s 1.25 million long term unemployed”
There’s only 664 thousand people unemployed in total, so I would think that the number of long term unemployed would be less 1.25 million.
Sam, the unemployment figures are fraudulent (at least in intent), and have been for at least the last 20 years. Since you count as “employed” if you work for an hour per fortnight, there is no meaningful comparison with the 2% unemployment that was usual when I was young.
Raising the Newstart allowance significantly should probably only be done in conjunction with things like raising the minimum wage.
I’m willing to concede that the Right does have point about the danger of creating a dependency culture. Raise unemployment benefits to European levels and staying on Newstart could become too attractive. Where I disagree strongly is the idea – highly convenient – that this is the ONLY thing responsible for long-term unemployment, which is patently ridiculous. Though with the bipartisan emphasis on training or work-for-the-dole, this is no longer as much of an issue. It’s simply no an attractive proposition to be on the dole in this country – if it ever was.
I can’t for the life of me understand why there aren’t bigger allowances for the long-term unemployed to undertake training.
And you’re right billie – we actually engineer a great deal of unemployment. The RBA gets nervous and raises interest rates just when we start to make inroads into unemployment. The NAIRU is a truly evil concept.
I feel for anyone on the dole – constantly being under the mircoscope of Centrelink isn’t much fun.
DI(NR)
it’s an hour per week to be counted as employed, so you’ve exaggerated the fraud by 100%. I suppose your talking about all those discouraged workers who have given up looking for work. Fair enough, for some purposes, but even counting those you are never going to get to 1.25 long term unemployed.
And is anyone seriously suggesting that people who aren’t even looking for work get paid a dole equal to the average wage, which is $1000 per week?
In comparing the unemployment allowances with the average wage in each country, it’s worth remembering three things.
Firstly, many other countries have lower average wages. For example, in the UK the average weekly full-time wage is £479, which at today’s rates is A$874, considerably less than the A$1,196 mentioned above. 40% of the UK average wage of A$874 is A$349. Australia’s 24% of $1,196 is… A$287. Lower than the British one, but not as much as we get from straight percentages.
Indeed, if Aussies got the same rate as Brits – A$349 – this would be only 29% of the average Aussie wage. Same money, lower percentage.
Thus, Aussies are better off than Brits when employed, and worse off when unemployed.
This flows on to the second point – cost of living. Most people know that Brits have a higher cost of living than Aussies. Rents, transport, food – all are more expensive. So even if they earned the same they’d have less spare cash at the end of it.
They have higher taxes, too. So in seeing the unemployment benefit, we’re not seeing how much after-tax income is being covered. The Swedes (for example) get higher unemployment benefits, but the price is much higher taxes in years of employment.
So Aussies when employed have more discretionary income than Brits, and can better afford to set aside money for rough times. When unemployed, Aussies need cover lower expenditure than would the typical Brit. This is where the tax issue is relevant. If you feel that you could afford to pay (say) an extra $20 a week in taxes to provide for higher unemployment benefits, why could you not set $20 a week aside as emergency cash, or if you believe you’ll never be unemployed, give $20 a week to charity to make up for the unwillingness of others to pay higher taxes for the sake of the needy?
Lastly, different countries have different unemployment rates. Countries like Germany and Luxembourg tend to be better at ensuring most of their people who want to can work, global financial crises notwithstanding. There’s a difference between providing (say) 50% income replacement to 4% of your population, and doing it for 12% of your population.
For my part, I say the same now as I did at the time of Howard and Rudd’s cash handouts – if we’ve really got billions of dollars to chuck around, let’s at least create some jobs and have something tangible afterwards.
I should like to see the federal and state governments doing more spending on sustainable infrastructure, rather than simply handing cash to people. If we can afford (say) $100 a week more for (say) 1 million unemployed, well I’d rather we took that $100 million a week employing 100,000 people at $500 a week (the other half to materials) and built solar towers, wind turbines, railways, timber plantations, factories, even – God help us – more roads. These 100,000 people spending their $500 a week would do rather more for the economy overall and thus the 900,000 still unemployed people’s job prospects than simply handing out $100 extra cash to the 1 million.
Kaishu@21: the trouble with setting money aside is that you get zero dole until you’re down to some tiny amount remaining. I think it’s more like $5000 than $500, but I’ve never got down that low. The low amount is in some ways quite nasty – it means that anyone unemployed is extremely vulnerable to any disturbance, whether that’s their fridge breaking down, needing a quick ambulance trip or someone damaging their means of transport. Anything that costs more than a couple of hundred dollars takes non-replaceable savings. From what I’ve seen it’s very, very hard to live on the dole in a major city and if you have savings that just makes it harder – you either dip into them for “luxuries” like dental treatment and job interview clothes, or you angst about “voluntarily” doing without. Either way the mental stress of making the decision is extra worry that you don’t need. And not having the expensive but essential possessions just means paying more for them in other ways – hire purchase or renting, for example.
Likewise, dealing with Centrelink is a full time job and your employer is not a good one. Irrational demands, micromanagement, poor record keeping and appalling internal communication mean that even university graduates find it challenging to stay on the dole for more than a few weeks. The cliche example is Centrelink demanding that a “client” walks out of an unpaid trial position to attend an interview and explain why they haven’t found a job yet. I have been in Centrelink and heard one of their staff do this to someone over the phone.
Twenty years ago it was possible but difficult for a smart family to live quite well on the benefit by owning a cheap home in a smaller city and working hard to live cheaply. I recall an article on how one such family had paid off their mortgage while doing so. But since then costs have gone up compared to benefit levels and non-cash benefits have also been reduced (discounts on government services like power and phone bills… which are not government services any more for that matter).
Of course, if you are a true blue aussie you simply keep the saved money as cash or in a friend’s bank account so the question never arises. Which is a whole ‘nother issue.
moz,
Regarding the waiting period based on your assets, you can game the system quite easily. If you know you’re going to become unemployed a few weeks or months in advance, just pay off the credit cards, pay off debts (real or imaginary) to family members, pay the rego in advance, or if all else fails, just accumulate a pile of cash under the bed.
The last few years, I’ve had a string of 6 or 9 month contracts interspersed with periods of unemployment, so I’ve become well acquainted with Centrelink. They’re generally quite reasonable as long as you do the paperwork they want, have plausible explanations for things, and (most importantly) never get angry at them.
I’ve got a friend who’s been on the dole for almost 10 years (supplemented but never completely replaced by tutoring), while she labours to finish her PhD. She refers to Newstart as the ‘John Howard Memorial Scholarship’!
That said, I agree that the level of benefits should be higher.
Surely the main point about the low rate of unemployment benefits and the hoops one has to go through at Centrelink is that its both inhumane and degrading.
Sam @ 9,
Sorry. [Whips oneself.]
I got called up for Vietnam but failed the medical (which really was a forgone conclusion but I was too young to realise it because I was busy trying to ignore my disabilities and lead a normal life.) And, I didn’t know anything about Vietnam back then except that it was a jungle somewhere and if I went there people would shoot at me and probably kill me. Which I was not at all keen on. Hence the confusion.
Whatever, Sam @ 20. The official numbers are still bullshit.
I have no idea what the actual unemployment/underemployment numbers are in Australia, but neither does the ABS, because they’re measuring the wrong thing.
DI @ 25 – I think the ABS do have the numbers as they measure hours per week. Its just the collation and reporting of the official unemployment rate is based on 1 hour per week as that is the international standard. And I don’t see why the underemployment rates they publish would be wrong as its just based on whether people who work part time (any hours) want more and full time workers who only got part time hours.
Hi, been a long time reader, but first comment here
This really got my atention because I think that the most defining comment is this one
How is our average wage evaluated, and how are these international ones evaluated?
When it comes to the definition of unemployment, although it is, in my opinion, wrong (1 hour/week is NOT employed) it is at least an international standard (from my understanding).
But the ‘average wage’ I think, at least in Australia’s case, is something that not too many people actually earn. In fact, I would estimate that a relatively small percentage of people actually earn over it. Perhaps it is because that some of the wages are so far above it, that it drags the ‘average’ up? This is of coutrse only from what I see around me, so is only my impression. Would love to be proved wrong.
I don’t think that our unemployed have it too bad. A few years ago I found myself on the dole, and actually found that I was not much worst off financially than when I was working. And that was in a trade (but without any overtime). There is much more to the dole than just the payments, there are many ‘benefits’ if you know where to look. All legal. Rent assistance, help with bills etc.
But back to the original, if the average wage is determined differently, then the rest of the comparison becomes meaningless.
Centrelink deems you to be employed, if you are one of the surveyed households, if you have an hour of work, paid of unpaid, in the survey period. The [telephone] survey is conducted in the first or second week of the month and pertains to activity in the fortnight. Unpaid work includes voluntary work. Unemployed people are not full time students, not working, not on work programs, actively looking for work and able to start work tomorrow.
The hour of work per week is not an international standard. Germans who work less than 15 hours a week are ‘unemployed’.
The above shows how we can have 0.5 million ‘unemployed’ yet 1 in 8 working age Australians rely on Centrelink for income support i.e. 1.25 million people
A decade ago my friend and I on salaries at the bottom of the top quintile calculated that although Swedes pay more tax than Australians by the time we had topped up our super contributions, paid our health insurance we would have been as well off in Sweden financially but have more peace of mind because the higher taxes provided a safety net that Australians have to provide for themselves.
Although I applaud the individuals who rely on Centrelink to provide income support while they complete a PhD these comments indicate the growing immorality of employers who hire workers for insufficient hours to earn a living wage so these workers rely on Newstart for income support.
These types of work practices are immoral! Universities are prime culprits, so are aged care homes and schools who expect emergency teachers to live on thin air outside winter term.
Workers employed under these conditions are not likely to build up a body of expertise because they don’t have continuity of employment
Tom R, the average wage is $1196 per week or $58,000 odd per year
The median income is about $28,000, a similar figure to GDP per capita
If you earn over $120,000 you are in the top quintile of income earners
I too have spent time living on Newstart level incomes and know single people who have saved for overseas trips but that was 30 years ago and their budgetting was ferocious, they fought over their share of every utility bill so fiercely it was easier to carry them.
From my helicopter style observations, long term unemployment is corrosive, people can’t accumulate enough resources to fulfil their dreams – they keep their nose to the grindstone keeping their Centrelink paperwork up to date, this becomes more complicated if they suffer from a bout of poor health which strikes them harder than it does someone who can pay to see a doctor they day they take ill, can afford the medicines and can eat nutritious food. In areas where there are large numbers of Centrelink beneficiaries it takes 3 weeks to get a doctors appointment, (even if you can pay!)
You wonder if the regular TV programs bashing Centrelink recipients as ‘dole bludging surfer bums’ isn’t a social control measure cynically designed to keep the unemployed voiceless, powerless and unable to mobilise to campaign for better conditions.
From 2010 children will have to remain at school until they are 17. The federal government provides Austudy to children over 16 years of age. Austudy provides a book allowance to buy textbooks, this allowance is made available at the end of May every year. Areas with large numbers of families on Centrelink payments do not have the resources to provide class sets of the Year 11 and Year 12 texts with copies in the library. These children are being set up to fail!
Why does this matter, about 20% of Australian kids are effected.
Yes billie@29 there are big problems with the move to a casualised workforce that, so far, our safety net has not caught up with. With no certainty of work from week to week many are forced to stay on the Centrelink books for often small amounts of payment so that they can maintain a little bit of financial security.
For that they subjected to the unpleasant rigours of jobnetworks that are more interested in how they can pull a buck from form fulfillment manoeuvres than looking after their “clients”. Add to that, the requirement of applying for numerous jobs when they probably already have one that has more prospects by the very fact of just staying in it.
Call me slow, but I always undertook casual work as an opportunity to show my skills so that the employer would see how good I was and convert me to full time work.
It’s clear that a large pool of casual workers suits some employers very well, for obvious business reasons i.e. they are a casual labour hire company supplying nurses, emergency teachers. I note one labour hire company dangles the carrot of contractors converting to permanent, about 5 a year out of nnn on their books.
As I queued on Wednesday morning to drop my form in for ongoing income support I used to compare the smart dress of the casually employed ‘clients’ against the poor presentation of the Centrelink staff – it was a huge relief to eventually get a fantastically paying contract.
“The hour of work per week is not an international standard. Germans who work less than 15 hours a week are ‘unemployed’.”
Billie, that’s not correct. It is an international standard — promulgated by the ILO.
“It should be noted that ABS definitions of employment and unemployment conform with International Labour Organisation (ILO) standards. The ‘one hour criterion’ in the definition of employment is considered fundamental to the ILO definition of unemployment, which refers to a situation of being completely without work.”
http://www.aph.gov.au/LIBRARY/Pubs/RN/2006-07/07rn18.htm
I agree that it’s not a very sensible definition, but the ABS has to use it for the present.
Unemployment would be much lower if if “fair” meant a fair sharing the available work rather than the employed providing a smidgen of support to the unemployed via taxes. There are signs of better worksharing in this recession compared with the 1993 recession. However, almost all of this comes in the form of retaining existing employees rather than giving jobs to people who have lost their jobs elsewhere or who are trying to enter the workforce for the first time.
There are a number of barriers to running effective worksharing. For example:
1. Employers and employees enjoy the efficiencies of people working longer hours but don’t pay the costs of unemployment. Perhaps we should set up a system where most of the dole is paid for those enjoying these benefits? With a definition of excess working hours that is varied as unemployment changes.
2. Unfair dismissal laws are a diincentive for employers who may want to do the right thing about worksharing. Perhaps we need special rules to get around this – Allow employers to exclude a certain percent of workers from these rules or?
3. In theory penalty rates discourage employers from offering OT. In practice, the result is that employees fight to get more OT. We would have a fairer pay system that penalized employees less if worksharing was introduced if base rates were higher and penalty rates lower.
What else?
Paulus @ 33 – What countries are free to do is use a different measure of unemployment for internal consumption as do many EU countries – again not standardised as some use 12 hours, some 15 etc. But obviously when wanting to compare one country with another you need one common definitiojn and the ILO one is used.
JohnD @ 34 – there are also fixed overheads per employee which is a financial barrier – eg payroll, performance reviews, time each employee has to spend on keeping up with internal company procedures. And there is communication overhead with handovers during the work week. Not to say that there aren’t gains to be had as well especially if the employees are willing and able to be flexible with their work hours (eg filling in for each other when sick, less loss of knowledge when people leave etc).
Chris @35: I am not trying to say that sharing the work does not increase some of the costs of employment or that direct benefits, such as reduced penalty paymnets and improvements to individual performance are sufficient to counter balance these extra costs.
What I am saying is that company decisions should take account of the costs to the country. Costs to the country include the tangible costs such as dole costs and the costs associated with running the dole system. They also include intangibles such as the damage to individuals and society as a consequence of unemployment.
It might help focus employer minds if the costs to the country were paid for by companies who work their employees for excessive hours. (Definition of excessive moves to suit unemployment levels?) My recollection from the 1993 recession was that a cap of only 50 hrs would have made quite a diffference but I am not sure what the figures are now.
There is no doubt that the dole has not increased in line with increased costs of living in the last 15 years.
It is basically impossible to live on the dole and still be within 1 hour’s travel of the CBD in most Australian capital cities.
In comparing the unemployment allowances with the average wage in each country, it’s worth remembering three things.
Firstly, many other countries have lower average wages. For example, in the UK the average weekly full-time wage is £479, which at today’s rates is A$874, considerably less than the A$1,196 mentioned above. 40% of the UK average wage of A$874 is A$349. Australia’s 24% of $1,196 is… A$287. Lower than the British one, but not as much as we get from straight percentages.
Indeed, if Aussies got the same rate as Brits – A$349 – this would be only 29% of the average Aussie wage. Same money, lower percentage.
Thus, Aussies are better off than Brits when employed, and worse off when unemployed.
This flows on to the second point – cost of living. Most people know that Brits have a higher cost of living than Aussies. Rents, transport, food – all are more expensive. So even if they earned the same they’d have less spare cash at the end of it.
They have higher taxes, too. So in seeing the unemployment benefit, we’re not seeing how much after-tax income is being covered. The Swedes (for example) get higher unemployment benefits, but the price is much higher taxes in years of employment.
So Aussies when employed have more discretionary income than Brits, and can better afford to set aside money for rough times. When unemployed, Aussies need cover lower expenditure than would the typical Brit. This is where the tax issue is relevant. If you feel that you could afford to pay (say) an extra $20 a week in taxes to provide for higher unemployment benefits, why could you not set $20 a week aside as emergency cash, or if you believe you’ll never be unemployed, give $20 a week to charity to make up for the unwillingness of others to pay higher taxes for the sake of the needy?
Lastly, different countries have different unemployment rates. Countries like Germany and Luxembourg tend to be better at ensuring most of their people who want to can work, global financial crises notwithstanding. There’s a difference between providing (say) 50% income replacement to 4% of your population, and doing it for 12% of your population.
For my part, I say the same now as I did at the time of Howard and Rudd’s cash handouts – if we’ve really got billions of dollars to chuck around, let’s at least create some jobs and have something tangible afterwards.
I should like to see the federal and state governments doing more spending on sustainable infrastructure, rather than simply handing cash to people. If we can afford (say) $100 a week more for (say) 1 million unemployed, well I’d rather we took that $100 million a week employing 100,000 people at $500 a week (the other half to materials) and built solar towers, wind turbines, railways, timber plantations, factories, even – God help us – more roads. These 100,000 people spending their $500 a week would do rather more for the economy overall and thus the 900,000 still unemployed people’s job prospects than simply handing out $100 extra cash to the 1 million.
Replying to Yobbo with this. The Catch 22 of course is that if you move away from the CBD in order to afford rent/food you would be breached by Centrelink regardless.
As for the media’s role..see Media Watch the Monday before last for an example of the media interviewing someone on the dole and allegedly re-editing his comments to make hime look like a feckless surfer dolie.