Ideas@TheCentre
Tough break for long-term job seekers
As the queues of long-term unemployed grow, low-skilled and vulnerable people are being kept out of the casual job market.
In a submission to the government’s review, the Australian Chamber of Commerce & Industry (ACCI) has called on the government to extend incentive payments to cover casual jobs. Under the current system, organisations that pair jobs to welfare recipients receive incentive payments only when job seekers find a permanent position.
Long-term unemployment had been trending down for the majority of the last decade from roughly 24% in mid-2002 to 14% in January 2008. Since then, however, the trend has climbed to 20%. This means there are more people out of work and on welfare for longer.
Jobs Australia, which pairs welfare recipients to new jobs and is the peak body for non-profit organisations, announced last week that approximately 590,000 people have been unemployed for more than a year.
Among several of the ACCI's suggestions is including casual jobs in the incentive structure for job agencies, which is a no-brainier. The casual workforce in Australia was last estimated at 20% – that’s one in five workers. Put differently, one in five jobs are offered on a casual basis, which means job agencies looking for positions to place welfare recipients are restricting their search options by a fifth.
But the situation may be even worse because some industries have a higher degree of canalization than others. Low skilled industries, such as retail, tourism and hospitality, are more highly casuals than other industries. The Australian Hotels Association noted that casuals in the hotel industry account for roughly 65% of the workforce.
The long-term unemployed generally have lower skills and relatively fewer options in the job market. Many of the positions appropriate for these job seekers would be in these highly casuals sectors.
Job agencies already receive incentive payments when job seekers are placed in permanent positions. Their payments are usually contingent upon a minimum period of employment, which ensures that job agencies do not rot the program. Otherwise, a job agency could find work for job seekers for a few weeks, pick up its payment, and move on to new welfare recipients – while the sacked job seekers find themselves out of work again and back on welfare.
Barring incentive payments for casual positions locks the long-term unemployed out of valuable job opportunities and a vital entry point into the job market. Including incentive payments for casual positions is a small but easy change to make a difference.
Alexander Philipatos is a Policy Analyst at The Centre for Independent Studies.
