Getting the job done: How to resolve the Newstart debate

Yet these pushes have stalled in recent weeks as the reality sets in that the Coalition government won the election, and doesn’t have to submit to centre left social advocacy groups.

Given the flawed design process that led to the proposed Voice, compromise is more difficult there. But in relation to Newstart, advocates may see some progress if they change tactics.

As distasteful and foreign as some activists may find it, a good starting point would be to consider what matters to the other side on this debate.

The government repeatedly says the best form of welfare is a job – and it’s likely the public agrees – and one of the key distinctions arising from this fact is between short and long-term unemployment.

The government rightfully notes that the majority of people who go onto Newstart exit the payment within 12 months. For those people, Newstart functions as intended: a transition payment between jobs, which can be supplemented by credit or savings.

Many people go through short periods of unemployment over the course of their lives: and therefore can sympathise with the position of those in short-term unemployment.

Which brings to mind another (more relevant) aphorism: ‘there, but for the grace of God, go I’.

A much-cited statistic in response to these observations is that there are more or less seven unemployed people for every new job: implying that the failure to create enough jobs is the primary cause of not only short-term but also long-term unemployment.

In other words, from that point of view, unemployment is primarily about external factors, not internal ones (such as a lack of skills, personal issues, or bad choices). But it’s worth unpacking this a bit.

First, the trite observation is that if each of those seven people has a roughly equal chance of getting the job (which is the implication of unemployment being about external factors) then an unemployed person would have a better than 50% chance of getting a job by the time they’ve applied for five jobs and by the time they’ve applied for 20 jobs, the probability of getting a job is above 95%.

By the time it reaches 40 jobs, the probability of success is 99.8%.

Second, the ABS notes “in recent months there has generally been considerably more than 300,000 people entering employment, and more than 300,000 leaving employment.”

Now obviously not everyone who leaves employment goes straight on to Newstart, and a large portion of these jobs are filled by people who are not on Newstart. But a thought experiment is revealing here. Let’s assume 50,000 of those 300,000 jobs are filled each month by people on Newstart.

Now if Newstart were simply a job queue – so you joined at the back and the first 50,000 people were taken off the front of the queue each month – it would take around 12 months for someone who lost their job today to make it back into work.

Depending on how many people joined Newstart each month, the total recipients would go up or down, but most people would be on Newstart for a short period.

We know that both of these observations are oversimplifications; they ignore geographical issues, changes in participation etc. But it does show how unlikely it is that external factors alone would keep almost 300,000 people – around 40% of the total cohort as at December last year – on Newstart for more than five years.

Even at the height of the mining boom in 2008, the long-term unemployed (those unemployed for more than a year) still constituted just shy of 15% of the number of those unemployed.

As distasteful and foreign as some activists may find it, a good starting point would be to consider what matters to the other side on this debate.

Long-term unemployment is a lot more complex than simply blaming the economy. ABS data from 2010 found that half of all long-term unemployed had not completed Year 12.

ABS data also indicates that non-dependent male children over the age of 15 living at home, single men living alone, and single mothers were all more likely to end up long-term unemployed. It is also true that the long-term unemployed are also more likely to have disabilities.

Some unemployed people are in areas, particularly some remote Indigenous communities, where there are basically no jobs at all.

There are studies that suggest long periods of unemployment are a negative when applying for a job.

Yet some individual factors are less acceptable. Evidence from the US suggests that unemployed people are more than twice as likely to use illicit drugs. Addiction (to drugs, alcohol or gambling) is a real barrier to employment. As are severe anti-social attitudes and behaviour, some of which may have led to a criminal record that also can hinder employment chances.

Anecdotal evidence from the US in particular also suggests that some people lack the basic life skills (hygiene, punctuality, reliability etc) necessary to sustain employment for any period of time at all. And some people who could find work choose not to, and simply rort the system.

Strangely, advocates don’t focus much on these issues, perhaps because the public are far less sympathetic to the plight of people whose long-term unemployment is driven by these factors.

The point is not that the long-term unemployed should be blamed for their predicament (though undoubtedly some should shoulder that blame). The point is that any increase in Newstart should be tied to a plan to address these individual factors as a way of reassuring the public they aren’t being taken for a ride.

The government may look far more favourably on the call to increase Newstart if the increase was structured in such a way that it addressed public concerns and helped to address the real causes of long-term unemployment.

Simon Cowan is Research Director at the Centre for Independent Studies.