It’s a demand problem Kevin!

In response to criticism that the Federal government has failed to do anything significant for the unemployed or those about to become unemployed they have announced they will provide an extra $300 million funding for Job Network providers to help the retrenched workers get jobs. This initiative confirms my worst fears that this is a government that has failed to learn the lessons of the past.

The Job Network is the privatised employment services system brought in by the previous government but would have been introduced had Keating won the 1996 election anyway. It is not well known but there are documents available that show the Labour government of the day was planning something akin to the Job Network, much to their shame.

I have written extensively, as have others, about the failure of the Job Network. It has had billions pumped into it by the national government but still we had 500,000 unemployed at the top of the boom and, if you recall, an alleged skills shortage.

The reason it failed is simple. It was the wrong solution to the problem. Its introduction reflected the neo-liberal slant of the period which focused only on supply-side initiatives in the false belief that the problem was a lack of skills and/or poor attitudes among those without work.

However, the overwhelming evidence is that there has not been enough jobs and hours of work generated by the Australian economy since the mid-1970s to fully employ the willing labour force. You cannot search for jobs that are not there. You might be interested in viewing a little nursery tale about this problem. The Job Network was just part of a pernicious system of compliance and punishment in partnership with Centrelink.

How the current government can be so lacking in insight to think that throwing more money at this failed institution will help our most disadvantaged citizens is beyond me. The PM claimed when he was announcing this huge waste of public money that the extra funds would allow “hands on” assistance such as skills assessments and referrals to training programs. You read that right.

So the Labour government led by the PM who wants us to abandon greed and neo-liberal values is using one of the primary institutions of that era (which exemplified the outsourced irresponsibility of the federal regime) to run the unemployed around in circles – churning them through interviews and training schemes divorced from paid-work environments – with no job hopes in sight.

What the Government should learn is that the problem of unemployment is a demand-side deficiency rather than being a supply-side issue. Demand-deficiency requires jobs to be created by spending. Then you can build training programs into the paid-work environment where they are most effective.

This is a sad waste of money but confirms the suspicions that the Federal Government hasn’t really worked out how to steer us to a sustainable and equitable growth path and clear away the neo-liberal mess left behind by the previous government.

This Post Has 2 Comments

  1. Please lay off the right-wing bashing, it’s getting absurd. Regardless of the various socialist theories you magically come up with, there’s no way in hell that the antithesis of capitalism would of delivered anything even close to the economic expansion experienced by this country under the Howard government.

  2. Dear MB

    I wish I was a better magician. My economics understanding is based on a thorough knowledge of the way the modern monetary system operates. Nothing more … nothing less. Further I don’t recall every mentioning socialism. As it stands, much of the world’s banking system is being socialised because the capitalist alternative has failed so badly.

    best wishes

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