Don’t increase Newstart; first use the money to fight long term unemployment

Simon Cowan

19 September 2019 | Spectator

As the government repeatedly says, the best form of welfare is a job, but when it comes to getting people off welfare and into employment there is a key distinction between short term and long term unemployment.

Many people go through short periods of unemployment over the course of their lives. They need temporary assistance in between jobs, but they usually find another job quickly enough, assuming the labour market is going ok.

However, for some, unemployment is a long term thing, no matter how good the job market gets. Almost 50 per cent of Newstart recipients have been on the payment for two or more years. More than 20 per cent have been on it for five or more years.

Even at the height of the mining boom in 2008, the long term unemployed (those unemployed for more than a year) still constituted just shy of 15 per cent of the number of those unemployed.

Those who claim that because there seven or eight unemployed people for every new job, external economic factors are the primary cause of not only short term unemployment but also long term unemployment, are oversimplifying matters.

Long term unemployment is a lot more complex than simply blaming the economy. ABS data from 2010 found that half of all long term unemployed had not completed year 12.

ABS data also indicates that non-dependent male children over the age of 15 living at home, single men living alone, and single mothers were all more likely to end up long term unemployed. It is also true that the long term unemployed are also more likely to have disabilities.

Some unemployed people are in areas, particularly some remote Indigenous communities, where there are basically no jobs at all. Some are older and have fewer jobs prospects.

There are studies that suggest long periods of unemployment itself are by themselves a negative when applying for a job.

Yet some individual factors are less acceptable. Evidence from the US suggests that unemployed people are more than twice as likely to use illicit drugs. Addiction (to drugs, alcohol or gambling) is a real barrier to employment. As are severe anti-social attitudes and behaviour, some of which may have led to a criminal record that also can hinder employment chances.

Anecdotal evidence from the US in particular also suggests that some people lack the basic life skills (hygiene, punctuality, reliability and so forth) necessary to sustain employment for any period of time at all. And some people who could find work choose not to, and simply rort the system.

The point is not that the long term unemployed should be blamed for their predicament (though undoubtedly some should shoulder that blame). But before we spend more on welfare, we need a plan to help get these people back into work.

Simon Cowan is Research Director at the Centre for Independent Studies.

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