JobFizzer: $4 billion subsidy scheme falls flat with employers
Treasurer Josh Frydenberg is facing pressure to overhaul JobMaker after the hiring credit fell flat with employers, raising concerns that the government is failing to offer enough stimulus to support the recovery.
Only 521 jobs have been created by the $4 billion scheme in its first six weeks, just 0.1 per cent of the 450,000 Treasury predicted would be supported by the program in the 12 months to October.
Applications opened at the start of February for jobs starting before October 6, meaning an average of 37,500 roles would need to be signed up each month to meet the government’s targets.
The lacklustre uptake has raised concerns that JobMaker – announced in the federal budget to support jobs when JobKeeper ends – is failing to deliver, with just $800,000 paid out to businesses so far.
It comes after the government’s own experts warned that the hiring credits, worth $100 to $200 a week for employers who hire new workers aged under 35, was open to rorts and could create more insecure work.
Although more businesses are expected to sign up when JobKeeper ends, Mr Frydenberg is now planning tweaks in the May budget to encourage more firms to sign up.
But Alison Pennington, senior economist at The Australia Institute’s Centre for Future Work, said the failures require a broader overhaul.
“The predictable failure of JobMaker should spark government interest in engaging in far more ambitious, hands-on jobs planning,” she told The New Daily.
Ms Pennington said the government should reprioritise JobMaker and broaden the part that’s supporting 500 ongoing roles for women in science, technology, engineering and maths (STEM) – a policy experts have backed.
“They know that they can invest in those stronger education-to-jobs pathways in areas that provide decent, meaningful work,” she said.
“[But] they’re so wedded to this ‘let the market do its magic’ ideology that they’ve really misunderstood the scale of this labour market crisis.”
The stakes are high as young people are lagging behind in the COVID-19 jobs recovery, with employment down 2.6 per cent for those aged 24 to 34 in February compared to pre-pandemic, and 7.3 per cent for those aged 20 to 24.
Research shows employment for young people can take up to a decade to recover after a recession, in what Equity Economics lead economist Angela Jackson said was an urgent issue that required a more effective government response than the one JobMaker is delivering.
“This policy was aimed at just getting [young] people a job, any job, and that’s what actually leads to the long-term negative impacts,” Ms Jackson told The New Daily.
“They get poor job matching, and they don’t necessarily develop the skills they need.”
Yet, while JobMaker is failing to deliver, the government isn’t expected to unveil big changes and is instead considering widening the eligibility.
“While the program [JobMaker] is still in its early stages, given the take up to date the government will examine its criteria and settings in the context of the budget,” Mr Frydenberg said in a statement.
But this approach ignores how hiring credit programs have proven to be an ineffective way to support employment generally, Ms Jackson said.
“It’s a difficult program for employers to necessarily navigate and they’re probably not going to bother for the financial rewards that are on offer,” Ms Jackson said.
Under the current rules of the scheme, employers are not required to provide ongoing employment once the hiring credits expire, or provide additional training to build skills.
Kristin O’Connell, spokesperson for the Australian Unemployed Workers Union (AUWU), said members felt “sold out” when JobMaker was announced, as the government was simultaneously mulling cuts to the temporary Coronavirus Supplement.
The union wants JobMaker scrapped and replaced with an in-kind increase in unemployment support, on the premise that members are better placed to find work when the rate of JobSeeker is above the poverty line.
“During the pandemic, when payments were above the poverty line, people were searching for work more than ever,” Ms O’Connell told TND.
That fewer than the expected 45,000 roles will be created by JobMaker also raises broader concern about the COVID-19 recovery.
Ms Jackson said the government must be careful in ensuring the level of government support for the economy is adequate moving forward.
“The problem with the way they structured a lot of their stimulus was that it was incentives or subsidies for behaviour,” Ms Jackson explained.
Although the federal government has earmarked $4 billion for JobMaker, the program is demand driven, meaning it’s possible that not all that money will flow into the economy if the scheme is undersubscribed.
“It means that if businesses don’t hire workers, if they don’t invest, then that stimulus won’t flow and the economy won’t get the support it needs,” Ms Jackson said.
“The government needs to be very mindful. We’re in a fantastic spot at the moment, but to keep that going there’s still going to be a role for government.”