Opinion & Commentary
Training is a means to the end, not the end
Last week the government announced its new ‘jobs compact’ which would guarantee a training place for all unemployed young Australians. The policy change will also see welfare payments cut for any young people who are not ‘earning or learning.
Kevin Rudd should be praised for this ‘tough love’ approach.
With unemployment rising, welfare lobbyists have been calling for a relaxation of mutual obligation requirements for the unemployed. This would be a mistake, and the government is right to say no: Once people become mired in long-term unemployment, it becomes incredibly difficult for them to get out of it. For young workers, who don’t have much workplace experience behind them, the task becomes nigh on impossible.
Any policy that stops young people leaving school and moving straight onto welfare should be commended.
The policy is a step in the right direction, but in all the talk of training programs we shouldn’t lose sight of the ultimate goal: jobs. We need to be realistic about what the program can achieve. Training is a means to an end, not the end itself.
If the program is poorly designed, it will be a waste of taxpayers’ money and will not result in better outcomes for young people.
International experience shows that training programs for the unemployed have a mixed track record. Some groups benefit more than others from training. One example is women who are returning to the workforce after having children. They are motivated, have some past work experience, and just need to brush up their skills.
Unfortunately, training programs that target youth unemployment have not shown the same positive results. A review of youth training programs implemented around the world concluded that almost none had been successful in moving young people into jobs.
The problem is that those young people who do benefit are those who are highly motivated and intelligent. However, they are also likely to be ones who seek out further education on their own.
The hard truth is that the most disadvantaged youth, who are more vulnerable to unemployment during a recession, do not appear to benefit from extra training.
Research shows that forcing young people who are not academically inclined to continue on at school or at a training course can actually be counter-productive. Kids who don’t want to be at school and who leave to take up a job or apprenticeship have better work prospects and higher incomes later in life than low-ability kids who are forced to muddle along at school.
Forcing these young people to undertake endless training courses might keep them out of the unemployment figures, but it won’t necessarily help them get a job.
The government’s new package can only be successful if there is an emphasis on earning as well as learning.
History shows that youth unemployment in particular shoots up during a recession: the workers with the least experience are often the first to go. There are, however, some things the government can do.
Last week the OECD warned the Rudd government that its proposed changes to welfare-to-work rules, as well as its new industrial relations legislation, could lead to a jump in youth unemployment.
While controversial, the tough welfare rules implemented by the Howard government were remarkably successful in lowering the rate of youth unemployment. By providing job search assistance to young people, as well as penalties for those who didn’t comply with job search requirements, they provided the necessary ‘help and hassle’ to move more young people into jobs.
Winding back these tough requirements risks sending the wrong message that just because there’s a recession, young people don’t need to try as hard to look for a job.
Tough welfare rules are meaningless, however, if there are no jobs for young people to go to.
Some employer groups have warned that the Rudd government’s award modernisation policy will push the cost of youth wages up, making young people less attractive to prospective employers.
During a downturn it’s preferable for young people to have the option of a lower-paid job, rather than being forced onto the unemployment queue.
It’s the most disadvantaged young people—low-skilled and without much workplace experience—who stand to suffer the most from these policy changes.
Jessica Brown is a Policy Analyst at The Centre for Independent Studies. Her paper Breaking the Cycle of Family Joblessness in Australia was released by CIS in May.
