30 July 2014

The unemployed: Sending 29 million job applications your way

Could there be a worse time to be unemployed in Australia?

The plethora of statistics and policies released in the past month would suggest not.

Earlier this week the Australian LNP Federal Government, through the Assistant Employment Minister, Luke Hartsuyker announced their new proposed AUD$5.1 billion jobs placement program and expansion of the Work for the Dole Scheme.

The government’s draft changes to unemployment and welfare requirements will: 
  • force unemployed Australians to apply for 40 jobs each month in order to qualify for benefits
  • mandate that fit and healthy job seekers aged under 30 will have to sign up for 25 hours of work for the dole for at least half of each year, and
  • those aged between 30 and 50, or who are under 30 and have limited physical capacity to work, will be expected to do 15 hours of work for the dole every six months. 
The thinking behind these research-free changes causes evidence-based analysts and commentators to despair.

Let’s deal with work-for-the-dole first.

In 2012 the UK the Department for Work and Pensions released comprehensive research into the effectiveness of the UK Government’s own version of work-for-the-dole scheme.

As the National Institute of Economic and Social Research (UK) reported what the analysis shows is that the programme as currently structured is not working. It has no impact on employment; it leads to a small and transitory reduction in benefit receipt…. the main thrust of welfare-to-work policy under both this government and the previous one has been to try to move (dole) claimants closer to the labour market. MWA (work-for-the-dole) appears to achieve precisely the opposite.’

As Greg Jericho commented on ABC’s The Drum:

Mr Hartsuyker dismissed research on work for the dole that has shown it doesn't work and can actually hinder the ability for jobseekers to get a job as "very old". This "very old" research covered the Howard government's work for the dole scheme, which the Government lauds as a success.

Clearly work-for-the-dole fits with current government’s ideological agenda and as such, no departmental or independent research was commissioned to support the spending of $5.1 billion (remember folks, we have a ‘budget emergency’) of taxpayers’ money.

Let’s now move on to the greater obligations that unemployed will now have in order to claim unemployment benefits.

Firstly, we have research released this week from Graduate Careers Australia which shows graduate employment is the worst it’s been since the 1992-93 recession, with only 71.3 per cent of bachelor degree graduates in work four months after completing their degree.

As the AFR reported on the release of the data:

‘The extent of the deterioration in full-time work for professions such as law, accounting, engineering and ­computer science is starkly illustrated by the data.
The percentage of law graduates with a full-time job fell to 78.5 per cent in 2013 from 83 per cent the year before, the lowest since records were first kept in 1982.
In accounting, the percentage of graduates with full-time work fell to 77.4 per cent in 2013, the lowest employment rate since 1992.
The accounting industry, like law, is undergoing profound restructuring with a hollowing-out of graduate work that is being outsourced, off-shored and automated.’

Secondly, consider the following employment data from the ABS:

May 2014
May 2012
May 2010
May 2008
Unemployed in Australia (seasonally adjusted)
Job vacancies
Unemployed to vacancies (ratio)

I would hope it’s obvious that the major factor preventing unemployed people from gaining jobs is a lack of jobs. Australia currently has nearly five unemployed people for every vacancy. This is a high historical figure considering the most recent six year period.

As Greg Jericho comments ‘… the current rate for Newstart is $13,273 a year. Given anyone earning less than $19,700 after tax is in the bottom 10 per cent of Australian households, those on Newstart are among the poorest of all Australians. You would have to be either extremely deluded, or a member of the Cabinet to think people are choosing to stay on such an income.’

As every recruiter and most employers will tell you, the problem isn’t getting people to apply for jobs, it’s finding people with the right skills and the right geographic availability to apply for jobs.

Even skills shortages are not as bad as they have been with the government’s most recent Skills Shortages report (February 2014) declaring ‘Twenty six occupations are assessed as being in national shortage (7 managers and professionals, 18 technicians and trades workers plus child care worker)’.
This is the lowest number of occupations on the official ‘skills shortage’ list since 1999 (24 occupations) and compares with recent years as follows:
Official number of occupations in
‘skills shortage’

Now just consider the following about the government’s announced policy about job seekers on the dole:

The government is seriously proposing that 721,300 unemployed Australians send out a minimum of 40 job applications per month, because, 'they aren’t trying hard enough'. Therefore 721,300 unemployed job seekers sending out a minimum of 40 applications each months equates to a minimum of 28,852,000 job applications each month just from unemployed job seekers.

Wait, there’s more!

There’s only 146,000 vacancies to where you can send the 29 million applications.

Job applications will, overwhelmingly be sent by unemployed job seekers to current vacancies (ie probably less than 1% of job seekers would send a speculative resume to an employer who is not advertising a job).

And that works out at … (drum roll please) an average of … 197 applications per vacancy just from unemployed job seekers!

Has the government seriously considered the impact that this proposed policy will have on businesses who advertise jobs? Have they made even the slightest attempt to talk with the groups who will be most impacted by this moronic policy?

Can you begin to imagine the outcry from the government’s natural constituency (the business community, both big and small) when they are flooded, day after day, with irrelevant job applications?

It’s laughable that such a stupid policy would even be considered, let alone announced as a draft policy.

It seems amazing that the following needs to be stated, but making people apply for more jobs does not create more people in employment!

Yet this is precisely what the government appears to believe will actually happen.

The Prime Minister even said (to Justin Smith on Radio 2UE yesterday) that small businesses should want job seekers knocking at their doors.

“We want to ensure that people on unemployment benefits really are serious in looking for work, but we don’t want to unnecessarily burden small business,” Abbott said.

“On the other hand, given that so many people in small business say that it is hard to get staff, maybe it’s not a bad thing if sometimes someone comes in and knocks on the door and says ‘well if you’re looking for work, if you’re looking for staff, if you’re looking for a worker, I’m available’.”

Is he serious? Does he really think this is what small business wants?

This is the sort of policy you get from people who have spent far too much of their life in politics, as either elected politicians or as party hacks working in party political positions, far removed from the day-to-day life of running a business or working in a ‘normal’ job.

What a mess.

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  1. Hey Ross,

    This is fantastic. Thanks for your hard work putting this together. The maths, like nothing else to me illustrates how stupid this is.
    Sandy Trousselot.

    1. Thanks Sandy. If only the government (all governments in fact) used data, rather than ideology to make their decisions we would all be much better off and wouldn't see so much waster.

  2. Totally agree. Plus the maths on the numbers surviving through labour hire companies as contractors (self-employed) who as a floating workforce, may be added to the numbers of unemployed at any moment.

    Companies not unlike Transfield, Skilled, Workpac offer 'contract management' services, some aligned to the 'Trouble Shooters case' and 'ODCO' models. Contracts which involve lowest-cost quotes, where the number of full time employees and contractors is reduced to the bare minimum to provide 'savings' to the business and the ability to end 'day/weekly hire' contracts without penalty. A similar 'casualisation of labour' model failed the Argentinian economy in the late '70's and 80's with devastating consequences. Other countries report similar economic failures. For example: a labour hire company making $1.60 profit per hour per person per 8 hour day from 65,000 contractors = $3M / year minimum.

    These companies continue to 'sell' their services targeting large, medium and small businesses. Job security is a myth. Training people to 'sell their own services' and be their own business, would be a more effective use of time and money.