Business Daily Media

Forget JobSeeker. In our post-COVID economy, Australia needs a 'liveable income guarantee' instead

  • Written by John Quiggin, Professor, School of Economics, The University of Queensland

There are now less than three months to go before the expanded JobSeeker payment is due to end[1].

As a result, there is a growing political debate[2] about what should happen to the unemployment payment that was roughly doubled in April.

Read more: How to improve JobKeeper (hint: it would help not to pay businesses late)[3]

While the government is reportedly considering[4] a revamp of both the JobSeeker and JobKeeper payments, we believe a much broader rethink is needed of the way we provide income support to people without a market income.

Instead of an unemployment payment - or the dole - we need a liveable income guarantee.

‘Snapback’ is not going to happen

It’s increasingly clear a “snapback[5]” to the pre-pandemic way of doing things is not realistic.

Forget JobSeeker. In our post-COVID economy, Australia needs a 'liveable income guarantee' instead Unemployment has jumped under coronavirus. Stefan Postles/AAP

The recent upsurge in coronavirus cases reminds us the new normal will see all sorts of economic and social activity constrained and subject to sudden lockdowns[6].

As a June Grattan Institute report[7] has also shown, we need more fiscal stimulus, not a return to pre-pandemic fixations on debt and deficits.

On top of this, we have also seen grim announcements of job cuts at Qantas[8], the sale of Virgin[9] and other well-known brands collapsing[10]. Many smaller businesses will follow their lead.

Thousands of hardworking Australians, many of whom have never been unemployed before, will be thrown out of work - some of them for a long time.

We need a new unemployment system for a new reality

The system of unemployment benefits that was in place before COVID-19 worked on the assumption there were plenty of jobs for anyone capable of filling them.

Unemployment was therefore seen as reflecting personal defects - either unwillingness to work or, more charitably, a lack of particular skills needed for “job readiness”.

Read more: No big bounce: 2020-21 economic survey points to a weak recovery getting weaker, amid declining living standards[11]

This assumption was clearly untrue, even before the pandemic[12]. As the long history of booms, busts and economic crises have shown us, all workers are vulnerable to losing their job through no fault of their own.

There aren’t jobs for everyone

The failure of labour markets to provide full employment is also seen in the increasing levels of underemployment, particularly among young people[13].

Underemployed workers are, by definition, willing and able to work, and ineligible for unemployment benefits. But they are nonetheless unable to secure a full-time job.

Forget JobSeeker. In our post-COVID economy, Australia needs a 'liveable income guarantee' instead Young people are increasingly underemployed. www.shutterstock.com

For an unacceptably high proportion of young people, the experience of the labour market has been one of stringing together part-time gigs, while trying unsuccessfully to start a career. Official measures[14] of youth unemployment hit 16% in May. A further 25.8% of young Australians between 15 and 24 years old were underemployed.

We need to do something different

Even before coronavirus, there was a pressing need to reform the way we support unemployed people.

JobSeeker (or its predecessor, Newstart), had not been increased in real terms since 1994. Business, community groups and researchers were among the loud chorus pushing for an increase to the payment which, on average, is about A$45.50 a day[15].

Read more: When the Coronavirus Supplement stops, JobSeeker needs to increase by $185 a week[16]

But to respond to the post-pandemic era, we need to make more comprehensive changes to the way we support unemployed and underemployed Australians, that acknowledge the scarcity of jobs.

A liveable income guarantee

Moving forward, we should adopt the concept of a liveable income guarantee or living wage. The living wage is closely linked to the idea of participation - starting from the principle everyone has a right to a liveable income and a responsibility to contribute to society.

Ideas of this kind, under names including “universal basic income”, “guaranteed minimum income” and “participation income” have been discussed since the 1960s.

They have attracted more attention in recent years as the failure of the current economic system to deliver full employment and broad improvements in living standards has become more apparent.

How would a liveable income guarantee work?

Many people already productively contribute to society in different ways, such as caring[17], but their work is largely obscured by the narrow measure of formal employment.

The social security system only partially supports those unable to work due to age, disability, unemployment, or caring needs. And support for all of these categories has been cut back and subjected to conditionality[18] under successive governments, operating on the ideology of market liberalism.

Read more: Vital Signs: COVID-19 recession is different – and we need more stimulus to deal with it.[19]

There are many possibilities of what contributions could be included and “paid for” under a liveable income guarantee. Most of them have some precedent, but have not been considered as part of a comprehensive program of social participation. The options include:

  • volunteering in support of organisations and causes
  • work on grant-funded community projects
  • support for beginning small businesses
  • ecological care projects
  • artistic and creative activity
  • full-time study.

All of these productive activities should be given the same terms, income and assets test as the pension.

Including supplements, a single pensioner currently receives up to $944.30 per fortnight. This is paid to the aged, people with disability and carers.

Without the Coronavirus Supplement[20], a single person on the JobSeeker Payment receives $574.50 a fortnight (including the Energy Supplement).

How to pay for a living wage

We estimate the annual cost of a policy along the lines suggested above would be less than $30 billion. About $10 billion a year would be needed to set all benefits equal to the age pension. The cost of expanded eligibility for the liveable income guarantee is harder to estimate, but unlikely to be more than $20 billion a year.

Most of this could be financed simply by forgoing the tax cuts[21] for high income earners legislated by the Morrison government after it won the 2019 election.

The welfare system should be more like the tax system

When it comes to government checks on people’s participation in their chosen community activities, we need to look to the tax system.

Currently the welfare system imposes strict compliance rules to prevent cheating at the outset. By contrast, the tax system is operated on the basis of self-assessment.

Taxpayer declarations are assumed to be true in the first instance[22], but subject to auditing. The liveable income guarantee should operate like this, where people submit their own participation declaration, as we do with our tax returns.

Forget JobSeeker. In our post-COVID economy, Australia needs a 'liveable income guarantee' instead The welfare system could operate more like the tax system when it comes to self-reporting. James Gourley/AAP

Looking ahead, we need to focus on cooperation rather than competition.

This means giving everyone the opportunity to contribute to society, whether or not they generate a market income. A liveable income guarantee will be a crucial step towards this goal.

This article was the product of discussion among a group that also included author Tim Dunlop, Western Sydney University emeritus professor Jane Goodall[23] and QUT senior lecturer Dr Jenni Mays.

References

  1. ^ due to end (www.smh.com.au)
  2. ^ political debate (www.theguardian.com)
  3. ^ How to improve JobKeeper (hint: it would help not to pay businesses late) (theconversation.com)
  4. ^ reportedly considering (www.smh.com.au)
  5. ^ snapback (www.theguardian.com)
  6. ^ sudden lockdowns (theconversation.com)
  7. ^ Grattan Institute report (grattan.edu.au)
  8. ^ job cuts at Qantas (theconversation.com)
  9. ^ sale of Virgin (www.theguardian.com)
  10. ^ other well-known brands collapsing (www.smh.com.au)
  11. ^ No big bounce: 2020-21 economic survey points to a weak recovery getting weaker, amid declining living standards (theconversation.com)
  12. ^ even before the pandemic (www.theguardian.com)
  13. ^ particularly among young people (www.theguardian.com)
  14. ^ Official measures (www.abs.gov.au)
  15. ^ about A$45.50 a day (www.smh.com.au)
  16. ^ When the Coronavirus Supplement stops, JobSeeker needs to increase by $185 a week (theconversation.com)
  17. ^ such as caring (www.pwc.com.au)
  18. ^ conditionality (vcoss.org.au)
  19. ^ Vital Signs: COVID-19 recession is different – and we need more stimulus to deal with it. (theconversation.com)
  20. ^ Coronavirus Supplement (www.servicesaustralia.gov.au)
  21. ^ forgoing the tax cuts (www.theguardian.com)
  22. ^ Taxpayer declarations are assumed to be true in the first instance (www.ato.gov.au)
  23. ^ Jane Goodall (theconversation.com)

Authors: John Quiggin, Professor, School of Economics, The University of Queensland

Read more https://theconversation.com/forget-jobseeker-in-our-post-covid-economy-australia-needs-a-liveable-income-guarantee-instead-141535

Business Today

Hunt and Brew launches Australia-first cold brew coffee

Australian boutique coffee maker Hunt and Brew has announced it will be sourcing the beans for its new “Australia” cold brew coffee from far north Queensland in a move that will make the company one of the largest buyers of ...

What you need to know about the Defense Production Act – the 1950s law Biden invoked to try to end the baby formula shortage

Biden invoked the Defense Production Act to help end the shortage of baby formula. AP Photo/David J. PhillipU.S. President Joe Biden on May 18, 2022, announced he is invoking the Defense Production Act to help end the shortage of ...

Baby formula industry was primed for disaster long before key factory closed down

Cities are trying to address the baby formula shortage with community drives.AP Photo/David J. PhillipThe conditions that led to a shortage of baby formula were set in motion long before the February 2022 closure of the Similac fa...

Utilising communication tech to alleviate employee burn out

Hybrid work solidified into the business model in 2021 – plain and simple. Jabra research revealed 42 per cent of employees last year requested leadership to help make their virtual workspace more comfortable. Employees are ...

Space Machines readies for liftoff securing launch services deal with SpaceX

SpaceX to carry Space Machines' Optimus Orbital Transfer Vehicle as part of its April 2023 mission. Optimus is one of the largest spacecraft built in Australia and furthers Australia’s sovereign capabilities toward in-space...

Deliver business benefits through operational excellence

As Australian businesses emerge from the pandemic lockdowns and draw up plans for growth, increasing numbers are adopting a strategy of operational excellence. Operational excellence involves everyone in an organisation and f...

Business Daily Media Business Development

Hunt and Brew launches Australia-first cold brew coffee

Australian boutique coffee maker Hunt and Brew has announced it will be sourcing the beans for its new “Australia” cold brew coffee from far north Queensland in a move that will make t...

NewsServices.com - avatar NewsServices.com

Utilising communication tech to alleviate employee burn out

Hybrid work solidified into the business model in 2021 – plain and simple. Jabra research revealed 42 per cent of employees last year requested leadership to help make their virtual wo...

David Piggott, Managing Director ANZ at Jabra - avatar David Piggott, Managing Director ANZ at Jabra

Space Machines readies for liftoff securing launch services deal with SpaceX

SpaceX to carry Space Machines' Optimus Orbital Transfer Vehicle as part of its April 2023 mission. Optimus is one of the largest spacecraft built in Australia and furthers Australia’...

Business Daily Media - avatar Business Daily Media

India's employee hostels are often like prisons – but young women garment workers don't always see it that way

Kavitha, 18, earns a living at a clothing factory in the southern Indian state of Tamil Nadu. Like many of her colleagues, she lives in accommodation provided by the factory, where she share...

Andrew Crane, Professor of Business and Society, University of Bath - avatar Andrew Crane, Professor of Business and Society, University of Bath

Shortage of workers threatens UK recovery – here’s why and what to do about it

For the first time since records began, there are more job vacancies in the UK than unemployed people, according to the latest monthly labour market figures. This has been driven mainly by a...

Donald Houston, Professor of Economic Geography, University of Portsmouth - avatar Donald Houston, Professor of Economic Geography, University of Portsmouth

A central bank digital euro could save the eurozone – here's how

Blockchain bailout?4K_HeavenThe European Central Bank and its counterparts in the UK, US, China and India are exploring a new form of state-backed money built on similar online ledger techno...

Guido Cozzi, Professor of Macroeconomics, University of St.Gallen - avatar Guido Cozzi, Professor of Macroeconomics, University of St.Gallen



NewsServices.com

Content & Technology Connecting Global Audiences

More Information - Less Opinion