unemployment Archives - thegoodwills.com

JobSeeker and the $50 ‘bonus’

jobseeker-unemployment — Contrary to popular opinion, almost half the people in this study relied on NewStart (now JobSeeker) for less than a year. Graphic courtesy of Wes Mountain and The Conversation.

You know how it goes. You’ve finished ferrying 16 items down the checkout conveyor and the assistant says: $142.99 – cash or card?

“How do the poor people get by?” I ask of no-one in particular.

Later, I went to the butcher ($47) and the organic fruit and vegetable shop ($56), all up $245.

She Who Pays the Bills said: “But we only needed a few things”.

Now if we were on unemployment benefit, such profligacy would leave us with just $375 to cover the next 13 days (rent, bills, fuel and more groceries).

It is timely to write about the cost of living, and how the reality appears quite different to the official inflation rate (1.2% in December). The Federal Government’s superficially successful $100 billion wage subsidy programme (JobKeeper), ends on Monday. Businesses that claimed JobKeeper passed on the subsidy to people they employed, regardless of how turnover and profit was tracking through the year that the programme was in place.

The last day of March also signals an end to the scaled-down Covid-19 supplement paid through JobSeeker. In the first few months of its origins, JobSeeker initially doubled the benefits paid to unemployed people.

JobSeeker, which replaced NewStart and associated benefits from March 21, 2020, introduced three levels of supplements paid through the first year of the Corona virus. From April 27 2020 to September 25, recipients were paid $550 extra a fortnight. This was then reduced to $250 extra per fortnight until December 31, 2020. The final supplement of $150 a fortnight was paid from January 1 until it ends next week.

Welfare groups had long lobbied the government to raise the unemployment payment beyond the poverty level.

The government made much of its decision to raise the rate paid to those on JobSeeker by $50 a fortnight ($3.57 per day).

As of next week, welfare recipients will have to learn to live without the additional $150 a fortnight – reverting to $620 a fortnight, excluding other payments like rental assistance*.

Economist Ross Garnaut’s latest book proposes that successive Federal governments, in cahoots with the Reserve Bank, have deliberately kept unemployment high since the mid-1980s. He writes that governments have ‘allowed’’ hundreds of thousands to languish in unemployment as a means of pursuing a policy to suppress wage growth and inflation.

Garnaut says this deliberate policy has ‘immiserated’ people.

He told ABC business reporter Gareth Hutchens that Australia should use its many resources to push the unemployment rate down to 3.5% by 2025. You may not remember, but unemployment was at this level or lower for decades between 1950 and 1975. This was an era when many Australians had permanent jobs in factories that made things.

Garnaut says the government and Reserve Bank have to stop guessing the level of ‘full employment’ (at which point the RBA starts lifting interest rates, as a means of combating inflation).

He says the budget deficits needed to sustain full employment should be funded directly or indirectly by the Reserve Bank. It is complex, but if you are interested, read more here.

The Conversation’s in-depth study of unemployment benefits busts a few myths. Research by a team drawn from the Brotherhood of St Lawrence, RMIT and ANU studied benefit payments between 2001 and 2016.

The premise of the report is that Australians receiving unemployment payments are often portrayed as “a relatively small group of people with personal or behavioural problems that stop them from getting a job.”

The research was conducted to challenge long-held perceptions of ‘us and them’.

One of the most startling conclusions clarifies myths about the long-term unemployed. The research found that nearly half of the Newstart population of 4.4 million (47%) received the payment for less than a year. Over two-thirds (68%), received it for less than two years. The study uncovered a concerning trend in the number of welfare payments suspended for not reporting income correctly or not meeting job-seeking targets.

“Our study found rates of suspension increased dramatically over the study period, from 2% in 2001 to 11% to 2016.

“Successive governments have increasingly sought to enforce this, leading to more uncertainty around the payment”.

So, while the unemployed go forward living on a minimum $44 a day, how will things go with the end of JobKeeper, the flawed business subsidy scheme which kept 3.5 million people off the dole queue?

As business editor Ian Verrender noted in an analysis for the ABC, JobKeeper turned into a profit mill for businesses that boomed during the lockdown. Billions of taxpayers’ dollars were paid to wealthy businesses, without the mutual obligations associated with welfare. The only reason we know about this at all is the corporate regulator’s belated decision to force listed companies to disclose their taxpayer handouts in the December half corporate results.

Verrender, an investigative scribe, laments the lack of a public register of JobKeeper recipients – “despite the scheme being among the most ambitious (of its kind) in the world”.

But it is not just the blue chip public companies that scored a windfall; tens of thousands of private partnerships, sole traders, charities and small to medium-sized businesses also prospered.

Many of the heads of Australia’s biggest businesses feature in the timely release of the Top 250 Rich List by the Weekend Australian. I say timely because it suits my purposes to mock the rich. What else can you do when the 250 individuals named in this list are collectively worth (in monetary terms- Ed.) $470 billion. As former journalist union chief Christopher Warren wrote in Crikey – that is equivalent to 25% of Australia’s GDP. Even the lower echelons on this list have a net worth of $450 million or more – $449 million more than the collective net worth of your average self-funded retiree couple..

Wish, the glossy magazine lift-out supported by full-page ads by Mercedes Benz, Cartier, Giorgio Armani and the like, is a supreme example of what The Australian calls ‘aspirational’ journalism.

For those on JobSeeker who aspire to getting best value from that extra $50 per fortnight, here’s a slow cooker recipe for lamb forequarters (large chops that are too tough for the barbeque). You can probably score a kilo for $15 or so. Buy 1.5 kilos each of onion, carrots, potatoes and the cheapest green vegetable (about $10 all up). Add a can of red kidney beans ($1.67) to flesh it out and cook the lot in a slow cooker while you are out applying for one of the 15 jobs a month needed to justify your welfare payment.

If you chucked in the right combo of herbs and garlic and made a gravy worthy of ‘Sir’ Paul (Kelly), the lamb will just fall off the bone and you’ll be eating this for days.

Buy an $8 bottle of red while you still can (he said, one eye on the coming of the cashless welfare card). Invite someone over (‘a loaf of bread would be great, thanks’).

Enjoy every casserole.

Clean Jobs Plan Tackles Climate Change

climate-clean-jobs — Image by enriquelopezgarre, Pixabay

Three big topics of 2021 – Covid-19, Climate Change and Job Creation, are inextricably linked to the future of the planet.

The official climate report is in for 2020, with global temperatures tying with 2016 as the hottest ever recorded.

Although Australians sweltered through an early November heatwave, the summer so far has not been too hard to endure.(except SA,Victoria and NSW are likely to see temperatures exceeding 40C this weekend. Ed

The data cited by the EU’s Copernicus Climate Change Service seemed at odds with images of Madrid enduring its worst snowfall in 50 years. The mercury in Madrid plunged to -10, compared with the January average of 3 degrees.

The New York Times said the heavy snowstorm presented complications for the Spanish government, still struggling with a rising Coronavirus caseload, more than 499,000 in Madrid alone. Spain’s Covid-19 death toll, more than 51,000, is one of the highest in Europe. The government warned residents to stay home, well aware of the temptation for people to venture outdoors.

That’s the nature of climate change, however; extremes in summer and winter and shifting weather patterns in the autumn and spring.

Spain is also struggling with the impact of Covid-19 on its workforce. More than one million jobs were lost during the worst months of the pandemic. Despite short-time work schemes and a third quarter rebound, Spain’s unemployment rate is still around 13%.

Youth unemployment (under 25’s) is 40%.

While Australia’s latest unemployment rate of 6.6% (December) looks good by comparison, the short-term nature of Spain’s jobs policy sounds depressingly familiar.

The International Monetary Fund estimated that in April and May up to a fifth of Spain’s workers were on short-term contracts. Possibly in an attempt to sway the government towards ‘green’ job creation, the IMF revealed that Spain’s housing sector is one of the most energy inefficient in the EU. It accounts for about 16% of Spain’s Emissions Trading System emissions.

“Residential housing would benefit from labor-intensive, climate-compatible public investment,” an IMF report said.

As the IMF observes, a focus on green buildings can provide a demand boost to support recovery, while closing gaps in green infrastructure and human capital.

“This will accelerate the transition to a low-carbon economy and strengthen the economy,” the IMF’s report on Spain said.

It’s no different Down Under, with the built environment said to account for 25% of Australia’s CO2 emissions. Attempts to regulate the building industry to make buildings more energy efficient have been inadequate.

The Climate Council listed energy efficient buildings and urban green spaces as part of its ‘Clean Jobs’ policy paper.

The Climate Council commissioned AlphaBeta, a consultancy specialising in advanced data analysis, resulting in a plan to create 76,000 ‘clean’ jobs.

The 68-page document (with four pages of references), sets out 12 opportunities to put Australians back to work, restart the economy and tackle climate change. The jobs include 15,000 installing utility-scale renewable energy (solar and wind farms, transmission infrastructure and utility-scale batteries). The plan also includes 12,000 jobs in targeted ecosystem restoration, and 12,000 in public and active transport constructions. Another 37,000 jobs are projected to be created in other projects across Australia, including in organic waste, energy efficiency in buildings, urban green spaces and community-scale storage.

This alternative solution to the 840,000 jobs lost to Covid-19 requires less than 0.5% of GDP. Every dollar of public spending is estimated to attract $1.10 in private investment.

The Climate Council’s paper was widely reported in alternative energy circles, but few mainstream media outlets covered the story. This is despite the Climate Council claims it would help people and industries that have been hit hardest by the COVID-19 crisis, especially in regional Australia.

“One in three job openings would require minimal training, meaning that displaced workers, from hospitality workers in Victoria to tourism operators in Cairns, could be rapidly employed.”

The Climate Council ran Clean Jobs briefing sessions with State government representatives after its launch in July. A spokeswoman told FOMM that meaningful actions were taken and worked into State budget announcements.

“We are in the midst of strategising for how we will revitalise the report for 2021, ensuring maximum impact and continuing on its success.”

The latest Australian employment data released yesterday shows an improvement in both the unemployment rate (down -0.2%) and the labour participation rate. Nevertheless, youth unemployment is still up 2.3% for the calendar year, at 13.9%.

Youth unemployment is as high as 25% in some parts of regional Australia. While the under-25’s are being propped up by the Jobseeker scheme, which effectively doubled the NewStart payment, this funding will end on March 21.

An ACTU submission to the Jobs for the future in Regional Australia Inquiry canvassed Australia’s rate of underemployment (8.5% from 9.4% in November). This far outstrips the OECD average, with ANZ describing the underemployment crisis as “widespread” throughout the country.

“Precarious work is increasingly becoming the norm, which makes it more difficult for workers to argue for fair pay and conditions.”

Underemployed workers are more likely to exhibit lower job satisfaction, higher job turnover, poorer mental and physical health and persistently lower income.

The Climate Council’s Clean Jobs paper reminds us that the Australian economy is vulnerable to escalating climate risks.

Property prices are liable to fall up to $571 billion and agricultural and labour productivity by $19 billion in the next decade. Flow-on effects will be felt across the country, and will worsen unless emissions are lowered.

These claims are corroborated by the Reserve Bank of Australia, which has stated that more severe, persistent climate-related shocks could threaten the stability of the Australian economy. The Australian Securities and Investments Commission has labelled climate change a “systemic risk” and the Australian Prudential Regulation Authority has said the financial risks of climate change are “foreseeable, material and actionable now”.

While Australia’s unemployment rate is trending down after hitting 7.5% in July, we should remember that a third of the labour force works less than 40 hours a week. The latest data from the Australian Bureau of Statistics shows the share of part-time employment rose to 32.1% for the year to December (4.149 million).

The Federal Government is pinning its hopes on improving the lot of young Australians through its JobMaker subsidy.

The JobMaker Hiring Credit will be available to employers for each new job they create over the next 12 months for eligible young people aged 16 to 35. The scheme started on October 7, 2020, with eligible employers able to claim $200 a week for each additional eligible employee they hire (aged 16 to 29) and $100 a week for employees aged 30 to 35.

Much noise has been made by and on behalf of the over-35 cohort, arguing discrimination, predicting the JobMaker scheme will further marginalise the long-term unemployed.

Ah well, at least young people who are hired on this basis will be able to afford a portable air conditioner. And here’s hoping everyone, including those hired under JobMaker, will be able to take paid sick leave if they are ill or are quarantining owing to Covid-19 testing

How deep is the financial hardship well?

financial-hardship-savings — How many weeks your savings will last without income – graph provided by The Grattan Institute

It is probably no comfort to anyone to reflect on the year when investors could get 14.95% on a bank term deposit. It was January 1991, the recession Paul Keating said we had to have. People with personal loans and credit card debt watched horrified as repayment rates went to 20% and beyond. The average variable mortgage rate rose to 17.5% at the same time. The gap between the haves and have-nots in that era was painfully obvious.

In the early 1990s, financial hardship forced many younger Australians, unable to service their mortgage repayments, to walk out of their mortgaged houses, leaving the house keys on the bank’s counter. Meanwhile, the lucky worker/investor with a lazy $100k to invest could earn $14, 950 in interest (the price of a new car), over 12 months with no risk whatsoever. Except, of course, if the deposit was with one of the eight financial institutions that went broke in that era.

In 2020, the COVCID-19 pandemic has certainly made it clear how many Australians are suffering financial hardship. At one end of the scale, you have self-funded retirees, on the pig’s back, really, but struggling with the collapse in the value of shares and difficulties finding safe places to store their cash for a return of more than 1.75%.

At the other end of the generational spectrum, while the official unemployment figure is an improbably low 6.2%, it does not reflect the one million casuals who not only lost their jobs, but did not qualify for the Federal Government’s safety net, Jobkeeper.

COVID-19 struck at a time when the Australian household savings rate had dropped to 3.6% (20% is the ideal), and is forecast to drop to 2% or lower in 2021-22. The rate is calculated as a percentage of the amount saved from disposable income.

Meanwhile household debt – most of it linked to mortgages – is at a high of 119.60% of GDP. Economist Gerard Minack told the 7.30 Report in November that household debt at 200% of household income was a “massive macro risk”.

Then came COVID-19 and an economic shutdown the likes of which the country has not seen since the 1930s.

I’m running these confronting numbers past you because there is a lot of nonsense written about Poor Pensioners vs Irresponsible Millenials. Also, some commentators, particularly in the housing sector, are ‘talking it up’ at a time when worst-case scenarios predict a 30% drop in prices.

Conversely, stock market analysts are talking the market down, even as it keeps (slowly) recovering. You have to wonder why.

In mid-April the share market was officially proclaimed a “bull market’’ by the Australian Financial Review (AFR), because share prices had jumped 20% since mid-March.

What’s amazing is that the market has rallied at the same time that Australian superannuation funds paid $9.4 billion in financial hardship paymentsto approximately 1.17 million fund members. Australian super funds have a large exposure to equities, so they have managed the payments so far by selling investments, including shares and holdings in managed funds.

They also asked for help. As the AFR’s exceptionally well-informed Chanticleer observed, The Australian Superannuation Fund Association (ASFA) put a proposal to Treasurer Josh Frydenberg to allow the Australian Taxation Office to cover the hardship withdrawal payments. The plan was super funds would repay the payments over a period of time. The industry also called on the Reserve bank of Australia to provide a liquidity buffer. None of this happened, but Australian funds are expecting a continuation of the rush to withdraw hardship payments.

Under the COVID-19 measures, individuals whose income has been affected can withdraw up to $10,000 of their superannuation balances prior to June 30. They can, if necessary, apply for a further $10,000 after June 30.

There are ordinarily a few hoops to jump through to apply for an early-release hardship payment. As we know, superannuation is meant to be locked away until you retire or reach an age when you can officially tap the fund for money. But in these dire times, super funds worked with the Australian Tax office and other government departments to expedite hardship payments.

By close of business on May 7, ASFA made around 1,175,000 individual payments, totalling around $9.4 billion in temporary financial support. ASFA estimated that 98% of applications were paid within five working days.

Applying for a super hardship payment is a risky business if you are under 35. According to AMP, the average super balance for people aged 25-29 is $23,371 for men and $19,107 for women. In the age group 30-34, the average balance for men is $43,583 and for women $33,748. So it does not take too many trips to the hardship well to run out of cash. I used those age groups deliberately, as most pollsters agree that so-called Millennials are people now aged between 22 and38.

But it is not just the young that have little in the way of savings. According to the Grattan Institute, 50% of working households have less than $7,000 in savings. This probably explains the rush of super fund hardship applications. The Institute admits the data is a few years old, but says the scenario is unlikely to have changed much.

“As you might expect, working households on lower incomes tend to have less in the bank. Among working households in the bottom fifth of household income, the median total bank account balance is just $1,350.

“The meagre savings of many low-income workers are a big worry because they are most likely to be employed as casuals and therefore not have paid sick leave or annual leave.”

The Grattan Institute makes the point that as the lockdown drags on, more people will start to run out of ready cash.

“Our analysis shows that half of working households have five to six weeks’ income or less in the bank. The bottom 40% of working households has about three weeks’ income or less in the bank. A quarter of all working households have less than one week’s income in the bank.”

This last figure may bring your head up, if you remember news stories from New York, which we found shocking, of people with less than $400 in the bank.

Sometimes I think about these matters when doing the weekly grocery shopping, where retail prices are clearly outpacing inflation. (Ed: We did score a large pumpkin from a roadside stall for $3, so you can get lucky).

Those with a job who have not had a pay increase in years can justifiably feel cheated. Admittedly, the Federal Government came to the National Cabinet table with an extraordinary rescue package. But while one of these measures temporarily doubled the unemployment payment overnight, it now seems to be flawed piece of legislation.

People may rightly point out that employers are obliged to pass on the Jobkeeper payment of $1,500 a fortnight, regardless of what the employee was being paid previously. At some stage, these payments will stop and we will revert to the status quo. Will recipients who were technically overpaid have to repay some of this money, or does it just go to the deficit?

Robodebt II, coming soon to a cinema near you.

FOMM backpages:

Newstart or job-share?

dad-needs-job — https://flic.kr/p/5YepYQ Image by Dane Nielsen

There are times when I’m grateful my conventional working life is behind me and I can wait (patiently) for the next humble pension payment. My needs are small – I can sit on the front veranda with a cup of coffee made on our machine for about 15 cents, enjoy my banana toasty, share the crumbs with the birds and do the crossword. Some may call me a leaner, but I’ve done my share of lifting, mate.

Meanwhile, out there in the thrust and parry world of staying in work, where HR is a growth industry, workers are lobbying for their next short-term contract, working out how long their redundancy payment will last or (forgive me for thinking this), shafting a colleague so they can get a better-paid job. Some, who make life plans based on aforementioned contracts, find said agreements withdrawn without notice for budgetary reasons. Yep, the veranda is better.

For one thing, the pension is linked to wage increases, which is more than you can say for Newstart (Australia’s unemployment benefit), which is indexed to the CPI. The September indexation will be calculated at 0.18%, which, on the single/childless fortnightly rate, is less than $1.

Surveys have repeatedly told the government of the day that half the 700,000 Australians who rely on Newstart are living below the poverty line. A 2015 study found that on any given day there were fewer than 10 rental properties in Australia that were affordable for people on the allowance.

Australian Council of Social Services chief executive office Cassandra Goldie told New Matilda the Newstart payment ($527.60 per fortnight for singles without children), had not seen a real increase since the Keating years (1991-1996). The major parties seem disinclined to increase the allowance, even when prompted by the Business Council of Australia. In 2013 the Greens lobbied for a $50 per week increase but failed to find sufficient parliamentary support.

This is a shameful state of affairs, the iniquities of which were plainly stated by Asylum Seeker Resource Centre founder Kon Karapanagiotidis. He tweeted on a Q&A TV debate about welfare that what a politician could claim for one night for staying in Canberra for work was equivalent to an entire week on Newstart. The Conversation fact-checked this statement and found it to be fundamentally true.

It might not seem like much, but after September 20 (next Tuesday), Newstart recipients will lose the twice-yearly $105.80 “income support bonus” added by Labor as part of its “Spreading the Benefits of Boom” package. In 2013, the Coalition announced the bonus would be scrapped from a range of benefits as Labor had funded it through the minerals resource rent tax (which the Coalition has since abolished). The Palmer United Party agreed to the bonus being scrapped on the condition it stayed until after the (July 2016) election. So rather than increasing this egregiously low payment, the Coalition is (let’s use a Tele headline word here), slashing it an amount which for a single person on Newstart provided a choice between a bacon and egg burger, a subsidised prescription, a pot of beer or an escapist video to watch after the Saturday ritual of circling jobs in the newspaper that by Monday will have already gone.

The ABC reported yesterday that Australia’s unemployment rate had dropped from 5.7% to 5.6%, but the rate of part-time work remains at an all-time high.

Since December 2015 there are now 105,300 more persons working part-time, compared with a 21,500 decrease in those working full-time.

In this country, part-time employment is defined as people in employment who usually work less than 30 hours.

The Australian (owned by an expatriate billionaire well-known for expecting senior employees to work long hours for a fixed salary), wrote that part-time work was ‘good for the over-40s’.

Economist Jim Stanford of the Australian Institute’s Centre for Future Work told the ABC in July the proportion of Australians working part-time has now reached a record 31.9%.

“Australia’s part-time employment rate has surged 4 percentage points since the GFC (2007) and is now the third highest in the OECD,” he said.

There are a few questions we should be asking about part-time work, chiefly: can you live on part-time income? If you are working part-time, is it by choice, or is that all you could find? Inter alia, did you know if you are on Newstart, and have found a part-time job as dish pig at a local café, you can earn up to $104 per fortnight before the allowance is affected? Break out the wine cask.

Let’s just imagine life on Newstart (equivalent to a night’s claimable accommodation for a working politician, remember?)

You are a 40-something male that has been “let go” – the latest in a succession of jobs that did not work out. You’ve spent your payout and your second wife has booted you out. You spend all day in the public library job-hunting, playing Solitaire and scribbling calculations on how you can live on $263.80 a week. A mate has rented you his caravan down the end of the paddock for $140 a week. Bargain. That leaves $123.80 for food and petrol (did I mention the caravan is 16 kms from town?)

Meanwhile, the rego is due, there was a letter in the mail with a photograph of you doing 122 kms in a 110 kms zone and then there is the dentist, who reckons you need two crowns and two root canal treatments.

You buy a packet of Panadol max and wash a couple down with the last lukewarm stubbie in the 20-year-old caravan fridge. Life’s great, isn’t it?

Australian society seems sharply divided between those who’d feel sorry for this fictional fellow’s plight and donate money to Lifeline and the hard-liners who’d say he’s a leaner who brought it all on himself (and how come he can afford beer?)

We need, if I may use a corporate weasel-word, a new paradigm. A UK think tank, the New Economics Foundation, proposed a utopian scenario for Europe that envisaged a society where those who can work are engaged for 20 hours a week. Anna Coote of NEF said there would be more jobs to go around, energy-hungry consumption would be curbed and workers could spend more time with their families. The model already exists in Germany and the Netherlands, the latter topping the OECD chart for part-time work. Coote mused about the rationale around jobs and growth and whether aiming to boost (insert country of choice) GDP growth rate should be a government’s first priority.

“There’s a great disequilibrium between people who have got too much paid work and those who have got too little or none.”

The Guardian’s Heather Stewart cited Keynesian economist Robert Skidelsky, who co-wrote a book with his son Edward: “How Much Is Enough?’ Skidelsky said the ‘civilised’ solution to technological change and fewer jobs is work-sharing and a legislated maximum working week.

There’s much need for a quantum shift/new paradigm, with youth unemployment at 13.2% in the UK and between 25% and 50% in seven Eurozone.countries.

It would not take much imagination to export these Eurozone ideas to Oceania (where youth unemployment is running at 13.5%).

Unhappily, Canberra’s politicians seem entirely lacking in imagination and worse, bereft of social conscience.

All 225 Federal politicians and Senators should think about this social issue on September 20, particularly if they are claiming overnight accommodation. Do claimable expenses run to the mini bar?