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Family Matters No. 30 - December 1991

Job seekers and the social security system

Helen Brownlee

Abstract

In this article the author argues that the Newstart Program, introduced in July 1991 to replace the old Unemployment Benefit fails to offer adequate employment and training to the vast numbers of long term unemployed people. Furthermore, when job opportunities start to improve sufficiently for the unemployment rate to fall, the people least likely to get work are those who have been unemployed for the longest period of time.

There has been a dramatic increase in the number of people out of work. In September 1991, there were 867,200 unemployed people looking for work compared with 627,700 in September 1990 that is, an unemployment rate of 10 per cent, compared with 7.3 per cent a year earlier (ABS 1990, 1991).

There were 104,500 unemployed married men with dependent wives and children in September 1991 compared with 66,500 in September 1990, and 33,900 unemployed sole parents in September 1991 compared with 30,500 a year earlier.

Of the 867,200 people unemployed in September, 436,400 (50.3 per cent) had been unemployed for six months or longer, while 219,400, (25.3 per cent) had been unemployed for a year or more. Of the 627,700 people unemployed a year earlier in September 1990, 238,700 (38 per cent) had been unemployed for six months or more, while 125,800 (20 per cent) had been unemployed for a year or more.

Government policies and the long-term unemployed

The Newstart Program was introduced by the Federal Government in July 1991 as a replacement for the old system of Unemployment Benefit (Brownlee 1991). It is designed to be a more active income support system than its predecessor, aiming to improve the job prospects of unemployed people (particularly those who have been unemployed for a year or more) by increasing their access to employment and training programs and to other labour market assistance.

An integral part of the Newstart Program is increased government expenditure on existing labour market, employment and training schemes. One of the aims of Newstart is to provide a system where there is more personal contact with unemployed people, with periodic interviews set up to review the unemployed person's needs and activities.

However, the Newstart Program was devised before the country entered a recession. Thus, although expenditure on employment and training programs was increased in the recent Budget, this has been outstripped by the increase in the number of unemployed people. Freeland (1991) has estimated that, although expenditure on employment and training for unemployed and disadvantaged job seekers will increase from $823.1m in 198990 to $1066.2m in 199192, expenditure per unemployed person will fall from $1598.25 per unemployed person to $1332.75 over the same period. Despite the increase in the number of training programs, he estimates that there is only one training place for every four long-term unemployed people.

Although community groups have welcomed structural changes to training programs made in the Budget, such as the expansion of programs combining work experience and training, there is general concern that there are not enough training places for the number of people out of work, including those experiencing long-term unemployment.

Many groups in the community have called for the introduction of job creation programs in order to alleviate unemployment. They point out that even when an unemployed person is able to undertake and complete a training course, it is unlikely that the person will be able to find work.

The government has rejected suggestions of job creation schemes as being a 'short-term' solution (Richardson 1991) and considers that 'the most effective approach to lowering unemployment during a recession is to move the economy into a stable growth path with low levels of inflation' (Australia 1991). Using this approach, the government expects the unemployment rate to stay at around 10 per cent for at least another year, then fall to around 8 per cent for a number of years.

Such a high level of unemployment is unacceptable. Apart from reduced financial circumstances that condemn many families to live in poverty, unemployment brings with it debilitating loss of self- esteem for job seekers and can place enormous stress on family relationships.

And the longer the period of unemployment continues, the greater is the effect on jobless people and their families. Experience from the 1982-83 recession suggests that even when job opportunities improve sufficiently for the unemployment rate to fall, the people least likely to get work are those who have been unemployed for the longest period of time.

The challenge of the 1990s must be to improve the employment prospects of this large and rapidly increasing group of disadvantaged Australians.

References

  • Australia (1991), 'Towards a fairer Australia: social justice strategy 199192', Australian Government Publishing Service, Canberra.
  • ABS (1990), Australian Bureau of Statistics, 'The Labour Force, Australia, September, 1990', Catalogue No.6203.0.
  • ABS (1991), Australian Bureau of Statistics, 'The Labour Force, Australia, September, 1991', Catalogue No.6203.0.
  • Brownlee, H. (1991), 'Employment and income security support', Family Matters, No.28, April.
  • Freeland, J. (1991), 'Spending increase claimed by Government ''misleading'' ', Australian Social Welfare Impact, September.
  • Richardson, G. (1991), 'Address to community forum on unemployment', ACOSS Annual Congress, 24 October, Sydney.