Newstart, Employment Insurance and Jobs for All

Three million Australians, or 18% of the workforce,  are out of work or significantly under-employed. This figure is a scandal in a wealthy country.

Increasingly, many of those out-of-work are over 50 years of age, as employers favour younger workers who are less set in their ways. People with disabilities, mental illnesses and their carers also face major hurdles in obtaining paid work. Politicians across the spectrum have apparently given up on removing barriers to employment. Instead, governments now rely on jobseekers giving up the search for work because it is too demoralizing, thereby dropping out of the official figures.

To rub salt into the wound, dealing with Centrelink as a recipient of social services and payments is a deeply humiliating experience. Dealing with employment services is equally soul-destroying. It would be difficult to design a social security and employment system that is less fit for purpose in assisting people who are living with challenges to get into the paid workforce.

Liberal and Labor governments have both failed to comprehend the scope of the dysfunction in our social security and employment systems. They keep churning people through failed ‘mutual obligation’ programs without upholding the government side of the bargain – to offer meaningful supports which do not demoralize and humiliate those out of work or under-employed.

This is our Call to Arms to create employment for all and reform the social security and employment service systems. Bold and innovative changes are needed on both demand and supply sides of the equation – measures that address the demoralization and isolation of jobseekers, and provide incentives for employers to change their hiring patterns. More of the same will not work.

Policy Agenda:

1. NewStart and the employment services system should be replaced with an Employment Insurance Scheme that is contributory and based on a genuine, and not punitive, form of mutual obligation. It’s purpose is to support all Australians to enter and maintain employment. It would redirect funding from NewStart and employment services programs into a consolidated scheme to support people who are out-of-work to re-enter employment as quickly as possible and to invest in a pro-active way in those out-of-work or under-employed over the age of 50, those with disabilities, mental illnesses and their carers, and those with a history of exclusion from the labour market.

2. The Scheme would introduce an NDIS-type individual support package for people who have been out or work or under-employed for more than 12 months, at the rate of $10,000 per year. This package may be used by jobseekers to purchase the services of a Job Coach (selected by the jobseeker) or skills and training. It replaces the JobActive, Disability Employment Services, and Transitions to Work programs for people out of work for more than 12 months, and redirects money from employment services providers to individual support packages.

3. To be eligible for an individual support package, jobseekers must join a Job Team of ten people in the same locality, for mutual support, group skills and training acquisition, group contract work, group voluntary work or group small business development. The emphasis is on the group rather than the individual to break the isolation and demoralization that usually incapacitates people with a history of exclusion from the labour market. It would be managed by community organizations (not service providers) such as sporting clubs, service clubs, churches and faith organizations, and small businesses, with an emphasis on local support and connections.

This replaces the Work for the Dole program and expands the NEIS program. Participants in a Job Team would be permitted to access their super for small or micro-business development, providing the participant and/or Team’s business plan has been assessed by an independent panel.

4. Centrelink would be required to deal with a jobseeker’s Job Coach as their agent and representative, not with the jobseeker directly. This relationship between Job Coach and jobseeker would be similar in status and protocol as that in the judicial system between a person and their legal representative. Centrelink, like courts of law, would be required to deal with a jobseeker’s representative. The purpose of this requirement is to remove the gross disparity in power between jobseekers and Centrelink.

5. All employees would have the option of joining the Employment Insurance Scheme (EIS). If they join and contribute an annual levy of 2% of income for a period of at least five years, they become eligible, in the event of unemployment, for an income payment at 80% of their previous income for 12 months. If they opt to not join EIS, they remain eligible for Newstart at current rates.

6. If an employer hires a person who is an EIS member over 50 or with disabilities, mental illnesses or a carer who has been unemployed for at least 12 months, or a person with a history of long-term exclusion from the labour market, the employer is able to pay just $10 per hour for the initial 12 month period of employment, with the remainder (up to the minimum applicable rate of pay) paid from the employee’s EIS support package or EIS directly.

7. To create a further financial incentive for employers to change their hiring patterns, a permanent Social Inclusion Corporate Tax Rate of 15% would be introduced for businesses in which 20% or more of employees are people with disabilities, mental illnesses, and/or people who have a history of long-term exclusion from the labour market.

8. To break the growing pattern of employers hiring people from overseas, even when appropriately qualified Australian workers are available for work, a legal requirement would be introduced requiring job vacancies to be filled by Australian citizens who are suitably qualified for the role before temporary visa holders. The Fair Work Commission would be empowered to investigate breaches of this requirement, conduct random inspections, and impose large fines on firms which breach it.

9. The TAFE and vocational training system in Australia needs structural and cultural reform. See our policy on Vocational Education and Training.