Opinion & Commentary
Those who can work must not be paid to sit at home
Politicians and welfare groups are again debating whether the unemployed should work in return for their welfare benefits.
At the moment, fewer than two in every hundred jobseekers are in work for the dole placements, and the Liberals claim Labor is killing off the program.
Employment Minister Kate Ellis says she's happy for work for the dole to dwindle because only 35 per cent of those who participate in it go on to get jobs. But long periods spent doing nothing erode self-confidence, destroy the habit of working and make it increasingly difficult to get back into regular employment. Work for the dole counters this by reconnecting long-term unemployed people with the routines and disciplines of work.
It also addresses the issue of fairness. People capable of work should not be paid to sit at home while their neighbours work and pay taxes to fund their benefits. One reason claimants should be expected to work is because this is what everyone else has to do.
Ellis is right that work for the dole does not help everyone find employment, but this is not its primary function. Research in Australia and overseas shows the main impact of programs like this is not their "participation effect" but their "compliance effect". Faced with an intensive activity requirement, people who could find work leave welfare and get a job rather than stay on benefits. When work for the dole was first introduced, one-third of those referred to it left welfare rather than participate, and workfare schemes in the US and Canada have had even more dramatic results.
So three good reasons to extend work for the dole are that it is fair, it gives people something to do, and encourages claimants who could find work to do so, reducing overall welfare dependency numbers.
But there is a downside. People who lose a job need to find another which is suitable to their qualifications and talents, and is likely to last. They need time to look and maybe to wait until the right position becomes available. Using work for the dole to hassle them to take the first available job could mean they accept unsuitable temporary work instead of waiting for a better, permanent position.
There is also the issue of cost. Work for the dole placements are expensive to administer. We couldn't afford to enrol every welfare recipient even if we wanted to. Given that most people who lose a job find another within six months, there's no point dragging people into these schemes who will find work anyway given a little more time. So, we need to distinguish people with a weak attachment to the labour force, who should be enrolled early into work for the dole schemes, and those who are committed to working, who should be given time to sort themselves out. This is easier said than done.
Former prisoners, people with health and substance-abuse problems, the homeless, and youngsters who have never worked should all be enrolled early into work activity schemes. But beyond these obvious cases, it is not possible from early on to accurately sort sheep from goats.
Then why not allow claimants to make the call? Suppose we had a default rule that all claimants should be referred to a work for the dole placement at the start of any claim, but anyone with a superannuation fund above a certain amount could opt out, drawing down on that to cover up to six months of Job Search.
One effect of this would be that anyone with a weak employment record (and therefore a small or non-existent super balance) would be directed straight to work for the dole, which is appropriate to establish the link to work and to deter unnecessary dependency. Those with a stronger work record who were serious about looking for another job could, by contrast, use their super savings to pay themselves the equivalent of the Newstart Allowance while they looked around for another position.
In this way, genuine jobseekers could take the time they needed to find suitable employment, making no claim on their neighbours. They would have a clear financial incentive to get a job quickly, to avoid running down their funds, but it would be their decision whether to accept any particular job offer. There would be no need for Centrelink to hassle them in any way.
The government should look again at work for the dole, for workfare is a proven strategy for reducing welfare dependency. But politicians should also think more creatively about allowing access to personal superannuation funds to free people from having to rely on welfare benefits at all during short periods between jobs.
Peter Saunders is a Research Fellow at The Centre for Independent Studies.
