Australians tend to agree that giving a hand up to those in need is better than a hand out. Yet with the success it has achieved among very long-term job seekers, perhaps the Federal Government’s “mutual obligation” policies are better described as a backhander to Australia’s most disadvantaged job seekers.
The problem with Australia’s approach to reducing unemployment among this group is simple: the “mutual obligation” policies employed by the Federal Government require long-term income support recipients to “give something back to the community” by forcing them into compulsory work activities unrelated to finding a job. Rather than identifying and addressing the potential barriers preventing unemployed people from getting off welfare, the Federal approach presumes that, in all cases, continued unemployment is caused by job seekers’ poor attitude towards work.
This policy has failed those most in need of significant labour market assistance. The role played by labour market training has been largely ignored in favour of an ideologically inspired “welfare to work” policy on the cheap.
The consequences of these shortcomings have been telling. Despite a decade of record economic and employment growth, between 1999 and 2004 the number of people who have been on unemployment benefits for more than five years grew by 68 per cent, from 75,000 to almost 127,000 people.
The individuals represented by these statistics have often left school early without ever having obtained a vocational skill, or are formerly retrenched workers from Australia’s rusting manufacturing industries. In every case, they face multiple barriers to find and keep work - barriers that are not overcome by the politics of blame.
Emphasising the responsibility of unemployed people to find work is not in itself problematic. Shifting some of the onus for finding and keeping a job onto the shoulders of individual job seekers represents a pragmatic response to the escalating costs of supporting and retraining unemployed people. However, the Federal’s policy places the responsibility upon low-skill and no-skill job seekers to solve their own unemployment crisis through a “work first” approach which largely ignores vocational training. Without an increase in the labour market training component of our unemployment assistance program - Job Network - Australia is unlikely to improve employment rates among the most disadvantaged.
Adult education and training in Australia are chronically under-funded. The level of public investment in labour market training is pitifully low: of the 30 members of the Organisation for Economic Co-operation and Development (OECD), only Poland and the Czech Republic spent less, as a proportion of GDP, than Australia.
The Federal Government's current attitude to labour market training reflects the neo-liberal view of education and training as primarily an individual responsibility: that since benefits accrue to those who gain a vocational qualification, individuals - not the state - should be primarily responsible for meeting their cost. This argument may have some merit in the higher education sector, however, the “mutual obligation” placed on disadvantaged job seekers to pay for their own training has helped swell the ranks of underemployed while contributing to Australia’s growing skills crisis.
One frequent criticism levelled by Job Network providers, who manage “Work for the Dole” community work projects, is that the Department of Employment and Workplace Relations limits the amount of money community work co-ordinators can spend on training participants: no more than 12 per cent of project funding. This led Ann and John Nevile to claim in their 2003 report Work for the Dole: Obligation or Opportunity (pdf file 125KB), that “95 per cent of community work co-ordinators … would like to incorporate more training in their projects than is allowed for under Departmental guidelines”. They explained that, without more training, participants in Work for the Dole projects are unlikely to gain the skills necessary for them to move from “welfare to work”. Subsequently, only 14 per cent of Work for the Dole participants end up in full-time work.
Rather than emulating the US “workfare” approach to unemployment, Australia should look further afield. Countries like Denmark have invested heavily in active labour market policies, such as publicly funded and supported vocational education programs, to address entrenched long-term unemployment and skills shortages. Having compared a number of the “welfare to work” strategies (pdf file 165KB) employed across the OECD, it is clear Denmark’s model has been the most effective at reducing welfare dependence over the last 15 years. The Danish example shows an education and training model can achieve both significant rates of mobility (moving unemployed people back into work) as well as reductions in welfare dependence and poverty.
Government investment in education and training are crucial in assisting modern economies to keep pace with the changing skill demands of a changing world. With the right mix of incentives and activity obligations, even the long-term and very long-term unemployed people can be assisted back into employment.
Both state and federal governments are starting to wake up to the consequences of declining public investment in training and education. In February this year, the Council of Australian Governments (COAG) announced its concern at stagnating workforce participation and productivity rates, releasing a national reform agenda entitled Human Capital Reform.
The report identified the need for more adults to acquire post-compulsory vocational skills qualifications to address this problem. What was less clear in the report was how this agenda would be funded, and by whom.
Two things remain certain: first, as long as the burden for improving Australia’s levels of vocational skills lies with Australia’s private households, the national skills crisis will continue to plague our labour market; second, while low-skilled unemployed people are expected to fund their own retraining, unemployment among those unemployed for five years or more will continue to grow.
At a time when our labour market attitude is plagued by skills shortages, “short changing” unemployed people on skills training is a policy problem which must be addressed. While the short-term costs may be hard to swallow for a Federal Government committed to reducing expenditure, the long-term costs of the ongoing welfare dependence of unskilled people, in addition to those of a continuing skills shortage, are far more unpalatable propositions.