JobKeeper – or RecoveryPreventer?

Emergency income support has a time and place in buoying Australians through the pandemic. But the usefulness of the unprecedented — but nonetheless unsustainable — emergency measures is very quickly reaching the end of its course. 

New data show that employers are struggling to find workers to fill vacant posts. Over half of employers reporting recruitment difficulties say the challenge is a lack of applicants — despite record numbers of individuals currently sitting idly on the employment sidelines. 

It’s understandable that attention has primarily been paid to the rate of unemployment when judging the scale of the pandemic’s economic conditions. However, there is increasing appreciation for why lifting the participation rate is what really matters in fuelling the economic recovery. 

What the new figures show is that employers are trying to get their businesses out of hibernation — but there aren’t the jobseekers to meet the call. Yet, there can be no economic recovery if there aren’t workers filling vacancies.  

The occupations in greatest demand are those that are relatively low skilled, such as retail salespeople, childcare workers, truck drivers, clerical staff, and sales reps. Since such roles tend to impose fewer hurdles in terms of applicants’ skills, experience, and qualifications, it might be expected they’d be flooded with would-be workers willing to trade daytime Netflix for the workplace. 

Lazy analysts are fixated on the demand side of labour markets — presuming that employment outcomes are purely driven by broader macroeconomic activity (never mind that activity is derived from the economy’s inputs; particularly labour).  

Of late, they especially see it as the place of government to propel this activity; through big spending initiatives and associated ‘multiplier effects’. Astonishingly, some propose yet more fiscal stimulus as the key to getting Australia’s economy back on track. 

What they fail to appreciate is how the supply side of labour markets work; which warn, instead, of the perils of elevated levels of income support (particularly the JobSeeker and JobKeeper payment schemes).