WELFARE-to-work programs promoted by federal governments over the past decade have failed to have any substantial effect on the pool of about one million Australians not in work.
Research by the country’s leading demographer reveals the extent of the economy’s shift from an unskilled to a skilled workforce — and the political challenge of finding jobs for the long-term unemployed.
Peter McDonald, professor of demography at the Crawford School of Public Policy at the Australian National University, said analysis showed the net effect of welfare-to-work programs was “zero”.
Tougher era for welfare recipients
The proportion of men aged between 25 and 54 who were not in the workforce had not changed from about 9-10 per cent from 2000 to the present day, he said.
Peter McDonald
“Even though successive governments have had major welfare-to-work programs, the net effect is zero,’’ Professor McDonald said. “The problem with Australians out of work is a problem of lack of skills in an increasingly skilled labour market.’’
Work-for-the-dole initiatives were first introduced by the Howard government in 1998. They were toughened in 2006 and have been used in various forms by both Labor and Coalition governments. The Abbott government has cracked down on eligibility for the disability support pension, to ensure people capable of working do so, and is seeking Senate backing to toughen access to unemployment benefits.
Tony Abbott announced an earn-or-learn initiative under which people aged under 25 would no longer be entitled to receive Newstart and those under 30 would have to wait six months to receive the benefit. The measures have failed to win support from Labor or the crossbench in the Senate.
The Rudd government maintained so-called mutual-obligation policies, although work-for-the-dole numbers fell under Julia Gillard premiership.
Professor McDonald said unskilled male workers were the first hit by a downturn and welfare-to-work programs did little to prepare them for economic shifts. “They haven’t developed the skills to allow them to adjust to the changing nature of employment,” he said.
Research by Mark Wooden from the Melbourne Institute of Applied Economic and Social Research has found that unskilled workers make up a shrinking proportion of the workforce. Labouring jobs dropped from 12.9 per cent in 1993 to 10.8 per cent in 2008 and 9.8 per cent in 2013. Over the same period, professionals’ share of the workforce increased from 16.9 per cent in 1993 to 20.9 per cent in 2008 and 22.1 per cent in 2013.
Overall, the workforce share of the lowest skill levels dropped by 3.4 points to 22.5 per cent between 1993 and 2013, while the share of jobs requiring top skill levels increased 5.5 points to 24.6 per cent.
Professor McDonald’s work found growth in jobs had been narrowly focused, with only seven of 19 industries accounting for 80 per cent of additional jobs between 2009 and last year. Nearly 40 per cent of jobs growth was in health, social services and education.
Healthcare and social services recorded the biggest increase of 193,000 jobs for an annual growth rate of 3 per cent. It was followed by education and training (113,000, and annual growth of 2.6 per cent) and mining (110,000 and annual growth of 10.8 per cent).
Jobs in “other services’’ rose by 65,000 during the period for an annual growth rate of 1.4 per cent while accommodation and food rose 59,000, or 1.6 per cent, a year.
Calculations performed by Professor McDonald, using Australian Bureau of Statistics data, show migrants have been playing a crucial role in filling job vacancies as the workforce increased by 800,000 between June 2009 and June last year. Migrants in that five-year period accounted for 600,000 of the increased employment while 330,000 jobs went to workers older than 55.
About half the increase in jobs for workers older than 55 was attributable to people in that age group staying in work longer, the other half was attributable to the growing number of people in that age group, Professor McDonald said.
This meant that for workers who were not migrants and were not aged over 55, there were 130,000 fewer people employed at the end of the same period. Much of this could be attributed to people aged under 25 staying longer in tertiary education.
In the same period, unemployment rose by 11,000. All of this net increase could be attributed to middle-aged women taken off the sole parents pension and placed on unemployment benefits.
With no expected future growth at the younger ages of the workforce, Australia would have to rely on migration for any increase in employment, but migrants were not taking jobs from unskilled Australian workers, Professor McDonald said: “The types of jobs skilled migrants are getting are not jobs these Australians would get.’’
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