Policy Monographs
Breaking the Cycle of Family Joblessness
Despite Australia coming off the back of a remarkable economic boom and enjoying historically low unemployment rates, in late 2008 almost one in eight Australian children lived in a family where no parent worked. Unbelievably, this figure is actually a marked improvement: family joblessness reached its peak in the mid-1990s when more than one in six children lived in jobless households.
While there has been some improvement, the statistics on family joblessness still paint a depressing picture. Despite experiencing a lower unemployment rate than most developed countries, Australia has the second highest proportion of jobless families in the OECD. While this represents a considerable social and economic cost to Australia, the biggest cost is borne by the children of jobless parents, who are significantly disadvantaged compared to their peers.
Family joblessness not only leads to welfare dependency and child poverty but also inferior health, social and developmental outcomes for children. Consequently, there is a broad consensus that the high level of family joblessness in Australia is unacceptable.
While the drop in family joblessness over the past decade can be partly explained by strong economic conditions, policy changes undoubtedly also played a role. This provides a clear map for policy makers who wish to avoid the recent gains being reversed. Parents are jobless for various reasons, and a multi-pronged policy approach is required:
• Reductions in the tax burden faced by workers will provide an incentive for jobless parents to move from welfare into work, as they will get to keep more of their new income. Despite budget pressures, the Rudd government must not abandon its commitment to tax cuts;
• A robust ‘welfare to work’ regime sends the message that everyone who can work should do so, providing assistance for jobless parents to find work and penalising those who don’t. Tougher welfare rules implemented over the past decade have certainly contributed to the drop in family joblessness. The Rudd government should resist winding back mutual obligation requirements, which will inevitably cause the number of jobless families to rise;
• Any attempt to tackle family joblessness must include the continued reform of the labour market. Wage setting and industrial relations policies must be governed by a ‘jobs first’ policy, with a key objective being the continued creation of low-skilled jobs. During a downturn, it is preferable for people to have the option of lower-paid jobs, rather than simply being forced onto the unemployment queue.
Thanks to policy reforms and good economic conditions, the number of jobless families has been dropping but as the country slides into recession, there is a danger that that these gains will be reversed. If tax, welfare, and labour market reforms are wound back, this danger will become a certainty. While the recession seems inevitable, good public policy means that a jump in the number of jobless families needn’t be.
Jessica Brown is a Policy Analyst with the Social Foundations Programme at the Centre for Independent Studies. Jessica holds a Bachelor of Arts (Hons.) in Political Science from the University of Melbourne. Her publications include Baby Steps Towards Self-Funded Parental LeaveMillion Dollar Babies: Paid Parental Leave and Family Policy Reform.
