Products – The Centre for Independent Studies

Indigenous Employment, Unemployment and Labour Force Participation: Facts for Evidence Based Policies

Helen Hughes
10 February 2010 | PM107
Indigenous Employment, Unemployment and Labour Force Participation: Facts for Evidence Based Policies

pm107

More than 300,000 Aborigines and Torres Strait Islanders—60% of those identifying as Indigenous—are in the labour force, working and living in capital cities and country towns; owning, buying or commercially renting their houses; and living like most other Australians. There is no ‘gap’ between these Aborigines and Torres Strait Islanders and other Australians. Their children attend mainstream public and private schools; most proceed to Year 12; and many go on to TAFE and university education and to rewarding careers. Their health and longevity appear to be the same as those of most Australians.

About 200,000 Aborigines and Torres Strait Islanders are welfare dependent. The majority of these -130,000—live in cities and country towns. Only about 70,000 live in remote areas and, of these, perhaps 10,000 live on small outstations.

The findings of this study are:

• Indigenous unemployment and low labour force participation are not caused by a shortage of jobs. The lowest Indigenous labour force participation is in the areas with the tightest overall labour markets. Aborigines and Torres Strait Islanders, even in remote areas, live within reach of jobs.

• Indigenous unemployment is three times that of other Australians. Almost 40% of Indigenous unemployment is in New South Wales, which has the largest Indigenous population.

• Indigenous non labour force participation is a much greater problem than unemployment. The difference between Indigenous and other Australian participation rates is twice as large as the difference in unemployment rates.

• Unemployment and not in the labour force rates are surprisingly consistent across states and between cities, regions and remote locations. Together, they are the cause of Indigenous disadvantage.

The causes of the low Indigenous labour force participation and high unemployment are well established: the erosion of unskilled jobs with ever higher entry qualifications; a severe decline in Indigenous education in English, literacy and numeracy; excessive welfare income; and high financial flows to Indigenous organisations. These have undermined the private behaviour and social cohesion of welfare dependent Indigenous communities in cities and towns, not just in remote locations. This combination of supply factors has stalled the move of Indigenous people into the labour force.

In urban locations, excessive welfare is the principal cause of Aborigines and Torres Strait Islanders not working. In remote locations, lack of education is the principal constraint.

There is widespread agreement that current policies are not working. Policies must recognise that Aborigines and Torres Strait Islanders are entitled to the same education, welfare and housing as other Australians, and have the same responsibilities.

Policy reform is essential:

• Remote schools must work to mainstream standards and have the same high expectations of their children. Students must stay in school at least to Year 10, and young people lacking literacy must attend remedial courses to receive welfare benefits.

• Rigorous welfare and unemployment benefits rules must apply to Indigenous people just as for other recipients to reduce the ‘welfare pedestal.’ This means eliminating CDEP and other pretend jobs.

• The states must follow the Northern Territory in introducing private property rights on Indigenously owned and controlled lands. Home ownership and private sector jobs are essential.

Emeritus Professor Helen Hughes has worked in the economics of development for many years, including a period of senior management at the World Bank followed by membership of the United Nations Committee for Development Planning. She returned to Australia to a chair in economics at the Australian National University, where she was also the executive director of the National Centre of Development Studies. She was the Distinguished Fellow of the Economics Society of Australia in 2004. Professor Hughes is a senior fellow at the Centre for Independent Studies in Sydney, where she is working on the south Pacific as well as Aboriginal and Torres Strait Islander development.

Mark Hughes is an independent researcher.

 

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