A Job is the Best Form of Welfare

What if there was a way to give everyone who wanted to work a full-time job? Catholic Social Services Australia deputy CEO Joe Zabar, says there could be and explains why we need to consider all the options.

With its announcement of an overhaul of the Jobactive program, the Australian Labor Party last week made the first move of the year on employment policy. But with a federal election looming, we ought to prepare ourselves for a mantra of “jobs” and “the economy”.

Employment is a high priority policy for all governments. The Coalition regularly points to the 1.2 million jobs created since its election in 2013. That is, by any measure, a positive outcome.

The Business Council of Australia makes the impressive – albeit generous – claim that businesses employ 10 million of the 12 million people working in Australia, suggesting that a government strategy of focusing on private sector jobs growth is a sensible one.

In a market-based economy such as Australia’s, paid employment is critical to both a flourishing society and economy. As long as wages are sufficient, work offers individuals and families the means to purchase goods and services and to participate actively and meaningfully in our society.

For many, paid work also provides personal growth and an opportunity to contribute to a broader sense of common good.

Despite the 1.2 million jobs created under the Coalition and a headline unemployment rate of around 5 per cent, Australia still has some 680,000 people without work and another 1.1 million people looking for more work.

When you consider those numbers alongside the reality that many Australian families are battling cost-of-living pressures, are anxious over insecure employment and affected by low wage growth, it’s hardly surprising that many people are struggling to see how they will secure a decent standard of living for themselves and their families any time soon.

Creating enough jobs to enable everyone who wants to work the capacity to do so, requires the government to re-examine key principles currently hardwired into our national employment policy settings.

The first of these is the principle that accessing welfare support should be discouraged.

Governments of both persuasions have deliberately kept a lid on Newstart payments and have continued to impose unreasonable waiting periods to access payments. They have also systematically ramped up compliance obligations and sanctions on those accessing welfare payments.

It is the classic “stick” approach to welfare.

This policy setting presumes that it is primarily a matter of personal choice whether someone is in paid employment or underemployed. Too often, policy-makers fail to acknowledge systemic factors such as access to appropriate employment opportunities, education and skills development, housing, transport and familial support as key influences on employment outcomes.

The second principle is that the job market is primarily a private sector market, and that the role of government is relatively passive. In short, the government’s role is to create a positive economic environment for employment and act as a conduit between those looking for work and the private employment market.

Australia’s current employment policy is leaving 1.8 million people looking for a job or for more work. And without a change, it’s hard to see how things will improve.

But what if there was a way to give everyone who wanted to work a full-time job? What if there was a way to provide a job that was near where someone lived, that provided all the rights and benefits of a minimum wage award-based job, but could be adapted to match an individual’s capability with the needs of the local community? And what if such a program could counterbalance the cyclical downturns in the economy, effectively creating full employment at all stages of the business cycle?

US economist Stephanie Kelton, who served as Bernie Sanders’ economic adviser during the 2016 presidential campaign, has proposed such a scheme.

Kelton is a part of a group of new US economic thinkers advocating for a “job guarantee” program that provides employment to all who need work by drawing from the pool of people unemployed during recessions and shrinking as private sector employment recovers.

At its heart, the scheme is a deliberate intervention in the employment market through competition rather than regulation, because the scheme is not available to private sector employers.

In their paper Public Service Employment: A Path to Full Employment, Kelton et al. argue that their scheme would cost the US government around 1.13 per cent of GDP each year after five years, but also provide a significant boost to the country’s GDP.

The scheme’s proponents claim it would create some 15 million direct jobs and indirectly contribute to the creation of an additional 4.2 million private sector jobs.

If rolled out in Australia, a job guarantee program could be used to set up place-based social enterprises that would deliver services to local communities where the private sector fails to do so. The services and subsequent jobs could range from environmental remediation through to trade support roles such as house painting and maintenance jobs in rural and remote regions of Australia.

The difference between this scheme and the various “work for the dole” programs is that it offers individuals the dignity of paid work, as well as the responsibility that comes with a paid job.

It also has the added benefit of providing a pool of job-ready individuals who are able to move into the private or government sector when economic conditions are strong.

There is no shortage of critics of Kelton’s post-Keynesian proposal, but at its heart is a fundamental truth that our current job programs ignore: Full-employment matters to those who are unable to get work or secure enough work to live a dignified life.

It is not simply an economic measure for the economists in the Treasury and Reserve Bank to report on.

If “the best type of welfare is a job”, then we need to consider all options to provide paid work to anyone who wants it.

About the author: Joe Zabar is the deputy CEO of Catholic Social Services Australia.