Australia is on average spending less than half of what similar countries spend on employment services, just as the number of Newstart recipients who have been on the payment for more than five years hits 15%, a new report says.
Amid continued debate about the rate of the Newstart payment, Faces of Unemployment, released on Friday by the Australian Council of Social Service (Acoss) and Jobs Australia, finds the nation’s cohort of long-term unemployed has surged since the early 1990s.
“This is a serious, and long-standing, policy failure,” the report said. “A majority of unemployed people are systematically excluded from paid employment. As people become unemployed for longer periods, their job prospects sharply diminish.”
The report laid the blame, in part, on overall government spending on employment services, which was “less than half the OECD average level, and the eighth lowest of 30 OECD countries”. That was combined with activity requirements for jobseekers that were “among the strictest in the OECD”.
And while 45% of the long-term unemployed people who accessed the government’s employment service program Jobactive were able to find a job in three months in 2016-17, 62% of those positions were part time and 38% were casual, the report said.
Warning that “high rates of long-term unemployment” were “becoming entrenched”, the report also provides the first profile of those considered long-term Newstart and Youth Allowance recipients, meaning they’ve received the payments for more than a year.
“In March 2018, 547,066 people (64% of recipients) had received unemployment payments for more than a year, similar to the 62% in 2016 but well above the less than 40% rate in the early 1990s,” the report said.
“Of deep concern, in March 2018, 44% had received unemployment payments for over two years and 15% for more than five years.”
Of those long-term Newstart recipients, 49% were over 45 years old, including 22% who were above the age of 55, while 29% had a disability, 16% were principal carers of children, and 21% were from culturally and linguistically diverse backgrounds.
More broadly, Acoss researcher Peter Davidson found the profile of people receiving welfare payments was becoming more disadvantaged as the economy changed.
“One reason for this is as unemployment falls (it is much lower than it was after the recession in 1991), those who are less disadvantaged in the labour market find jobs more quickly, leaving behind the more disadvantaged groups,” the report said.
“Another reason … is the growing share of unemployment payment recipients who would previously have received pension payments: people with disabilities and sole parents with school-age children.
“The welfare ‘reforms’ of the mid 2000s and 2010s were designed to boost workforce participation, but in many cases they simply shifted people from higher to lower social security payments.”
To address the problem, the report said governments should focus on wage subsidies, vocational training, and employment counselling and job-matching services, which would improve outcomes “despite the higher short-term cost”.
The Acoss chief executive, Cassandra Goldie, said the report showed those who believed unemployed people could simply “walk into a job” were wrong.
“Some people think a person who is unemployed can just walk into a job. Our evidence shows this perception is simply incorrect,” she said.
“There is only one job available for every eight applicants who are unemployed or underemployed. It is clear the labour market in Australia is very tough for a person looking for paid work or more hours.
“Things are even tougher for people who are unemployed, who are mainly searching for jobs at the lower-skilled end of the labour market.”
In total, there were 827,794 receiving Newstart and Youth Allowance in March of this year. The rate of Newstart, currently $545.80 a fortnight for a single person with no children, will increase to $550.20 next week as a result of indexation.
