Posted: March 25, 2005

Government and the JG Part 3

This is Part 3 of a series of blogs I am writing which are progressively examining (paragraph by paragraph) the letter from Federal Minister for Employment and Workplace Relations to the ALGA outlining why the Federal Government is afraid to give the most disadavantaged workers in Australia a job at federal minimum award wages (FMW). As brief background, recall that CofFEE's Job Guarantee plan has been endorsed by the Australian Local Government Association in a resolution carried last year. The ALGA wrote to the Federal Minister and received a reply from the Federal Minister for Employment and Workplace Relations Kevin Andrews on August 13, 2004 outlining why the Government rejects the Job Guarantee. This letter is now published by the ALGA HERE.

We take up the next argument in the letter. The Minister continues ...

The guarantee of a job at FMW could also act as a disincentive for some young people to pursues education and training and enhance their skills. Young people, especially teenagers, generally have better long-term outcomes and are more likely to be in stable employment if they pursue post secondary education or training to enhance their skills and employability, rather than join the labour force when they are just 15-19 years old.

I read this paragraph with some degree of surprise. This is a Government that has not provided enough opportunities for the 15-19 year olds in the nine years it has been in power. The Howard Government was elected in March 1996. They inherited (using February 1996 ABS Labour Force data) an appalling youth (15-19 year olds) labour market. At that time, the youth unemployment rate was 22.6 per cent (176.1 thousand). The following Table is taken from the ABS Labour Force survey data and compares the Labour Force status for 15-19 year olds at February 1996 and February 2005. EFT is employment full-time, EPT is employment part-time, Total E is total employment, UN is unemployment, LF is labour force, NILF is not in the labour force, UR is the unemployment rate and LFPR is the labour force participation rate. The figures are all percentages. For EFT, EPT, UN, LF and NILF they are percentages of the total 15-19 year old civilian population. For UR it is the total unemployed (in each educational category noted) as a percentage of the relevant labour force cohort. For LFPR it is the LF (in each educational category noted) as a percentage of the relevant CIVPOP category. The educational categories are Not attending school or tertiary education, Attending tertiary education full-time, Attending school, and Total of the all 15-19 year olds irrespective of educational status.

I should say at the outset that I agree with the tenet of the Minister's comment. It is better to ensure that youth receive as much education and training as they desire. I support people being given the chance to achieve as higher levels of educational attainment as they can because investment in people is the only real durable investment society can make. But I also would argue that we have to provide paid-employment opportunities for those who do not want to continue their formal education or require special attention - such as youth with psychosis. The Government has failed badly to provide opportunities for our youth who are neither working or participating in education or who are being forced to stay in education because of a lack of job opportunities.

First, the percentage of youth in total who are not in education has only marginally fallen over the 9 years (36.8 per cent against 33.7 per cent). There are slightly higher percentages in school and in full-time tertiary education. So for a government who may wish to promote participation in education the figures do not show a substantial improvement.

Second, there are now more youth in the labour force as a percentage of their civilian population (61.1 per cent then, 62.8 per cent now) but the labour force participation of those not involved in education has remained unchanged. Tertiary students are now increasing their labour force participation as their costs rise (which has had the detrimental side-effect of reducing the vitality of campus life). School children have also increased their labour force participation as the growth of the service sector has provided increasingly more jobs. Almost all of this increased labour force activity by those who are mixing work and education is in the part-time employment sphere.

Third, full-time employment has barely risen the youth who are out of the education and has fallen in share of their total employment. Increasingly, youth who have left the education system are relying on part-time work. Some argue that part-time work (of which about 60 per cent is casual) provides the path to full-time work and higher wages in the future for the 15-19 year olds. But the evidence is clear that this only applies to those who combine work and education and the full-time, better paying job is just a consequence of the completion of tertiary education rather than having anything to do with the 'skills' they learnt flipping (lentil) burgers!

Fourth, there are still (February 2005) 141.8 thousand 15-19 year olds unemployed (64.2 thousand who are also not in education), and a further 56.8 thousand not in the labour force and not in the educational system anywhere. In fact, while the NILF has grown by about 25 thousand over the period of the Howard Government almost all of that growth is in increased educational participation. The numbers who are still not in the educational system nor in employment (of any type) has remained virtually constant. While we cannot tell whether the cohort has changed membership much, it is a reasonable bet that there is a chronic pool of youth who are disengaged from the labour market and who the Government is doing nothing for. Similarly, the Government tolerates 64.2 thousand 15-19 year olds who are not in education but are unemployed. Some of the additional 91 thousand youth (February 2005) who are unemployed but also participating in education are doing so because there are no job opportunities for them in the labour market. It makes little sense to push people to remain in education as a result of lack of job opportunities. They would be better developing skills in a paid employment environment.

In the past, there were three paths a young person could take: (a) continue formal education to some natural completion; (b) enter an apprenticeship and enter the labour market as a skilled tradesperson. The public sector played a dominant role in the provision of skilled apprentices to the private sector. That role was abandoned by the Government who claimed it could no longer 'afford' to provide these opportunities. There was also an ideological claim that the private sector would do it better (privatisation in part led to the abandonment of infrastructure that provided skills development to youth); and (c) enter the labour market immediately and work, learning skills on the job - usually in factory production or retailing. Most of these opportunities are gone now and increasingly the youth who are not still in education have to compete for lowly paid, casual work with those who are combining some labour market participation with educational studies.

While the Government waxes lyrical about their 'new apprenticeship scheme' the fact is they are nothing at all like the real apprenticeships of the past. They are a wage subsidy to learn some on-the-job skills. The evidence clearly shows they are mostly going to retail firms in food and hospitality. While these opportunities are better than being unemployed they are not really providing a skill base for the future.

If the Government is so committed to providing opportunities for Australia's youth to learn and develop durable job skills why are there still so many (hundreds of thousands) who are not being catered for by policy? Why are there so many youth unemployed who could be performing useful roles in the community in public sector jobs? Why has the Government seen fit to leave 61 thousand odd kids not engaged with either the labour market nor the educational system? Why doesn't the Government see it as imperative to provide public sector jobs to these kids to provide them with incomes and contact with the employed society that they are growing up into?

It is in this context that the proposal to introduce a Job Guarantee for anyone who cannot find employment elsewhere is important. The Minister's claim that it would provide a disincentive to youth to participate in the education system is ludicrous when you consider the actual data provided above. The system is already excluding thousands from education. A Job Guarantee would provide the basic entry point to these kids to participate in paid employment. It could be structured in such a way that it encourages and provides skill development which may lead onto participation in formal education later in life. The important point is that there are thousands of kids out there being left behind. The Job Guarantee is one of a suite of policies (which includes paid employment provision, structured support for youth with mental and physcial disabilities, mentoring, and training) which we argue is essential to provide the youth with a secure environment to develop into adults with good labour market chances.

In the next blog I will expose the claims by the Government that the Job Guarantee would reduce the capacity of the private sector to cut wages for workers. Yes, you read that correctly!

Blog entry posted by bill