Time to end the sex discrimination in JobMaker

A simplified wage subsidy that doesn’t discriminate by age could potentially save and generate 100,000 jobs over the next six months.

With JobKeeper coming to an end and estimates by the Treasury that 100,000 to 150,000 people might lose their jobs, it is surprising that there is not more public discussion of how to keep the Australian economy growing while the pandemic continues.

Nothing was asked during question time in Parliament last week by the opposition. There was little media coverage pointing out how damaging the end of JobKeeper may be for many people and particular sectors of the economy still under enormous pressure.

The replacement for JobKeeper is JobMaker. At $4 billion, the program could fill the hole. The legislation has passed Parliament, but there has been almost no take-up by businesses.

This is mainly because there are problems with the design of JobMaker, largely stemming from the fact that it is targeted at a particular group: people under 35.

A generalised wage subsidy targeting young people, while great for those who get it, mostly displaces disadvantaged, low-skilled, high-turnover older workers. It is unclear that it would, in total, generate many new jobs.

Two-thirds to three-quarters of the money will likely end up as gross operating surplus, and ultimately in the pockets of high-income households.

In a high employment turnover country like Australia, with a high proportion of part-time work, it is almost impossible to design a set of rules that avoids significant displacement effects.

The policy could be wound down if the labour market is improving sufficiently and social distancing and other restrictions are unwound.

The best way to target young people, the unskilled and the long-term unemployed, is not to target them – and instead use the subsidy to maximise employment growth. The evidence is that they will benefit the most.

And this is especially the case with interest rates at zero, because those benefits are sustained – lower unemployment leads to higher wage growth, higher inflation, lower real interest rates and further falls in unemployment.

The reverse is the case if unemployment rises (if the $4 billion appropriated is not spent effectively).

And youth unemployment has already fallen much faster than anyone could have anticipated, partly because of a successful government response: 347,000 places now available under JobTrainer; increased funding for domestic university enrolments; 50 per cent wage subsidy for apprentices and trainees.

What is needed now is to keep the economy growing. When interest rates are zero, there is no speed limit to how fast unemployment can drop.

JobMaker should be simplified, and the age targeting dropped. JobMaker discriminates most against women over 35. They have often had career breaks, and need to use the time after 35 to build their superannuation balances, which lag behind their peers’ balances.

Older women are among the most vulnerable groups facing homelessness. Disadvantaging them further will exacerbate the problem. Eliminating the age and sex discrimination in the subsidies design will improve the fairness of the COVID-19 recovery policies.

JobMaker II could be designed as a rebate to companies on the increment to a company’s payroll. Companies whose turnover was still down in the March quarter this year relative to the same time last year would be allowed to deduct an amount equivalent to the JobKeeper payments that they received in the March quarter from their payroll, in estimating the starting point for calculating the increment.

The March quarter is usually a seasonal low for wage salaries and supplements for most industries. The Australian Taxation Office could rebate, say, 60 per cent of any increment to a company’s payroll above a growth rate of, say, 6 per cent (June quarter growth on March quarter starting point).

This would minimise the money going to companies that had already recovered by the March quarter this year, while still encouraging them to increase employment.

It would provide most income support for the companies that are still struggling, helping them to remain open and and retain their employees. The same could again be applied for the September quarter following a review in May or June.

The policy could be wound down if the labour market is improving sufficiently and social distancing and other restrictions are unwound.

Any company on JobMaker I could choose to stay on it or move to JobMaker II, but could not have both.

https://tea.instructure.com/eportfolios/473/Home/Ver_Godzilla_vs_Kong_2021_Pelcula_Completa_en_Espaol_y_Latino_Online_Gratis
https://mcook.instructure.com/eportfolios/928/Home/Ver_Godzilla_vs_Kong__Pelcula_Online_Gratis_Completa__Espaol_en_Castellano_y_Latino
https://colegiocatamara.instructure.com/eportfolios/332/Pgina_inicial/Descargar_Gratis_Godzilla_vs_Kong_PELICULA_Online_COMPLETA_en_ESPAOLLATINO__Pelicula_Estrenos_2021
https://shf.instructure.com/eportfolios/685/Home/VERHDGodzilla_vs_Kong_pelcula_completa_gratis_en_Espaol
https://tea.instructure.com/eportfolios/476/Home/Ver_Godzilla_vs_Kong__Pelcula_Online_Gratis_Completa__Espaol_en_Castellano_y_Latino

The Treasurer has $4 billion in his back pocket, and Parliament has given him a blank slate for the administration.
We estimate that funding could potentially save and generate 100,000 jobs over the next six months – 1 per cent higher employment than otherwise, generating higher wage growth and higher tax revenue, leading to a lower budget deficit in financial year 2023.

And at zero interest rates, the employment effect would be sustained.

JobKeeper has just ended. Companies are waiting to see what the government does next. There is no time to lose in making the change.
The federal government should scrap the age requirements for workers to qualify for its botched $4 billion JobMaker hiring subsidy to reduce unemployment faster, according to former Treasury and Reserve Bank of Australia economists.

Businesses have shunned the JobMaker hiring scheme that targets unemployed people aged 35 and under, forcing Treasurer Josh Frydenberg to plan changes in the federal budget in May.

Peter Downes, director at Outlook Economics, wants changes to JobMaker. 

The scheme has enrolled only 609 workers in its first seven weeks – but on Treasury’s projections, that number should have been at least 10,000 so far. It was projected to “support” 450,000 jobs in 2½ years and “create” about 45,000 new jobs.

Outlook Economics director Peter Downes said delaying changes until the May 11 budget would be “too late for tens of thousands of workers and thousands of firms”, particularly after JobKeeper ended on Sunday.

The targeting of younger workers was well intended but misguided, because they always had high job turnover rates and the current policy disadvantaged low-skilled older workers, he said.
“The way to reduce youth unemployment is to maintain a buoyant economy and use things like training and work to school programs to address the structural problem.”

“They all benefit disproportionately from higher employment growth.”

“With targeted wage subsidies you just disadvantage older low-skilled workers and the bulk of the money ends up in profits”.

Too many regulatory hoops
A broader $4 billion payroll rebate for struggling firms to retain or add to their employment levels could support 100,000 jobs by October and reduce the unemployment rate, he estimated.

The JobMaker hiring credit offers a $200-a-week subsidy for any employer taking on a new hire under the age of 29 and $100 a week for a new employee aged between 30 and 35.

The firm must have added to its overall headcount and the new staff must be working at least 20 hours a week.

Business groups have complained the JobMaker credit has not been widely promoted by the government and firms need to jump through too many regulatory hoops to receive it.

An eligible worker must have been on the JobSeeker unemployment benefit for at least one of the last three months.

Workplace hiring rules typically prevent prospective employers asking the age of job applicants and interviewees are generally reluctant to admit they have been on government welfare.

Innes Willox, chief executive of the national employer organisation Ai Group, said the government needs to give greater publicity to the availability of the JobMaker hiring credit and reduce the red-tape burden associated with the program.

Shadow treasurer Jim Chalmers said, ”the much-hyped centrepiece of the Morrison government’s budget has delivered less than 1 per cent of the 450,000 jobs the Treasurer promised.”

The youth unemployment rate was 12.9 per cent in February, well above the national unemployment rate of 5.8 per cent.

But Mr Downes challenged the elevated youth unemployment rate that has been used to justify targeting the subsidy at under 35s, who he said often changed jobs and artificially increased the jobless rate.

“Youth unemployment has already come down more than older unemployment,” he said.

“This is a good news story about the success of policy: 347,000 places now under JobTrainer; increased funding for domestic uni enrolments, 50 per cent wage subsidy for apprentices and trainees.”

Mr Downes was backed by former RBA board member Warwick McKibbin and Australian National University economist Renee Fry-McKibbin in a joint opinion column in The Australian Financial Review.

Mr Downes, a former senior Treasury forecaster, said lowering the jobless rate was crucial for improving the position of the federal budget.

“What happens to unemployment is critical to the budget outlook.”

“The falling unemployment rate contributed significantly to the improvement in the budget position during the Costello years.”

The rapid jobs recovery and record iron ore exports have delivered a $23 billion boost to the budget in three months.

The deficit is expected to be just over $150 billion by June – well below the $197.7 billion projected in the mid-year update.