The scheme to go before the Senate this week will give employers who take on someone aged 16 to 29 years who has been on JobSeeker or a related benefit a bonus of A$200 per week, and a bonus of $100 per week if the person is aged 30 to 35 years.<\/p>\n\n\n\n
New hires older than 35 won\u2019t attract a bonus, and nor will new hires who have been out of work but not on JobSeeker.<\/p>\n\n\n\n
The bonus will last for up to a year.<\/p>\n\n\n\n
There are reasons to focus on young people. Youth unemployment is 14.5%, almost double the economy-wide average, and young people have lost more working hours than older people.<\/p>\n\n\n\n
Also, young people will arguably be scarred for longer by the experience of unemployment (although many older people will be scarred for just as long or longer, never returning to work).<\/p>\n\n\n\n
But Australians aged 35 and younger make up less than half of those on JobSeeker.<\/p>\n\n\n\n
Most \u2013 about 800,000 of the 1.5 million \u2013 are older than 35.<\/p>\n\n\n\n
\n\n\n\n
![\"\"\/](\"https:\/\/images.theconversation.com\/files\/368169\/original\/file-20201109-19-1h602b1.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip\")
<\/a>\n\n\n\n
With Victoria reopening, summer coming and the treasurer talking confidently about \u201cfighting back\u201d, it is easy to forget how serious our unemployment problem is.<\/p>\n\n\n\n
Unemployment is at 6.9%, the highest it\u2019s been this century. If the thousands working zero hours on JobKeeper were included, it would be higher still. Even without including those people, treasury the unemployment rate to reach 8%<\/a> by Christmas.<\/p>\n\n\n\n Official forecasts say unemployment won\u2019t fall to 5.5% for three-and-a-half years, until mid 2024, an extraordinarily slow recovery<\/a> by the standard of previous downturns.<\/p>\n\n\n\n JobMaker as presently configured won\u2019t do enough to speed it up.<\/p>\n\n\n\n The budget speech said the hiring credit would support around 450,000<\/a> jobs , but treasury has since told a Senate hearing that only about 10% of those jobs will be jobs that wouldn\u2019t have been created anyway \u2013 about 45,000<\/a>.<\/p>\n\n\n\n In our submission<\/a> to the Senate inquiry into JobMaker we recommended four fundamental changes.<\/p>\n\n\n\n Opening the scheme to new employees of all ages, not just those age 35 or younger, could more than double the reach of the scheme.<\/p>\n\n\n\n It would also roughly double its cost, from $4 billion to roughly $8 billion, but that cost would remain modest<\/a> in the context of the government\u2019s stimulus spending to date.<\/p>\n\n\n\n Targeting younger workers would make sense if expenditure needed to be highly constrained, but with a need for more government spending rather than less there is no point in making the subsidy available to only some of the people who could benefit from it.<\/p>\n\n\n\n Limiting the credit to jobs filled by new hires who have been on JobSeeker or a related payment is unnecessarily constraining.<\/p>\n\n\n\n If the most suitable candidate for a role is already employed, hiring that person provides an opportunity for someone else to fill their old position. If it is a new job, it is likely to ultimately put an unemployed person into work.<\/p>\n\n\n\n The goal ought to be to strengthen overall labour demand, not to encourage only the subset of job creation where the new job happens to be a good match for someone presently unemployed.<\/p>\n\n\n\n The scheme requires employers to demonstrate that new hires have boosted payroll beyond where it was in the three months to September 30 2020.<\/p>\n\n\n\n But the payroll baseline is defined as including jobs supported by JobKeeper<\/a>.<\/p>\n\n\n\n As firms become ineligible for JobKeeper, and the payment rate is reduced in January and again in March<\/a>, many businesses that relied on the payment will have to lay off staff. As a result, they will have an actual payroll bill well below where it was in the three months to September 30 2020.<\/p>\n\n\n\n This will effectively exclude them from the scheme<\/a>, giving them no extra incentive to retain staff as they come off JobKeeper, or to increase working hours or hire more staff as conditions improve.<\/p>\n\n\n\n The government should ease the criteria to require employers to only demonstrate that they have boosted payroll net<\/em> of JobKeeper receipts.<\/p>\n\n\n\n The test should be more demanding. As designed, employers can claim back up to 100 per cent of an increase in their payroll, which creates incentives for employers to \u201charvest\u201d credits by converting full-time jobs to part-time.<\/p>\n\n\n\n As an example, an employer who reduces the hours of an existing employee from 40 per week to 20, while hiring two new employees at 20 hours each would be able to claim the hiring credit twice \u2013 despite total hours worked and wages paid increasing by only one 20 hour job.<\/p>\n\n\n\n This could be fixed by requiring each new hire to boost payroll by a multiple of credit paid.<\/p>\n\n\n\n An improved model would be simply to pay employers a proportion of their payroll growth, as proposed by economist Peter Downes<\/a>.<\/p>\n\n\n\n Our calculations suggest that as presently designed JobMaker will skew employment towards lower-wage, part-time jobs.<\/p>\n\n\n\n A rebate on additional payroll would instead encourage employment growth of all types \u2013 full-time as well as part-time, and extra hours worked by existing staff.<\/p>\n\n\n\n But even such a better-designed credit won\u2019t help much if there\u2019s weak demand for workers. To get it, we will need more stimulus, more government spending.<\/p>\n\n\n\n Our estimate is that an extra $50 billion<\/a> would drive unemployment down to 5% and kickstart wage growth nearly two years ahead of the government\u2019s schedule.<\/p>\n\n\n\n There are plenty of good options<\/a> for doing it, and a more ambitious JobMaker is one of them.<\/p>\n\n\n\n Brendan Coates<\/a> Program Director Household Finances Grattan Institute<\/a> Photo AlessandroBiascioli\/Shutterstock.<\/p>\n\n\n\n This article is republished from The Conversation<\/a> u<\/em>nder a Creative Commons license. Read the original article<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":" 1 December 2020. The government has targeted its JobMaker Hiring Credit too narrowly. The scheme to go before the Senate this week will give…<\/p>\n","protected":false},"author":2,"featured_media":17597,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"sfsi_plus_gutenberg_text_before_share":"","sfsi_plus_gutenberg_show_text_before_share":"","sfsi_plus_gutenberg_icon_type":"","sfsi_plus_gutenberg_icon_alignemt":"","sfsi_plus_gutenburg_max_per_row":""},"categories":[44,55],"tags":[651,868,597,866,869,867,733],"_links":{"self":[{"href":"https:\/\/www.socialpolicyconnections.com.au\/index.php?rest_route=\/wp\/v2\/posts\/17596"}],"collection":[{"href":"https:\/\/www.socialpolicyconnections.com.au\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.socialpolicyconnections.com.au\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.socialpolicyconnections.com.au\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.socialpolicyconnections.com.au\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=17596"}],"version-history":[{"count":4,"href":"https:\/\/www.socialpolicyconnections.com.au\/index.php?rest_route=\/wp\/v2\/posts\/17596\/revisions"}],"predecessor-version":[{"id":17703,"href":"https:\/\/www.socialpolicyconnections.com.au\/index.php?rest_route=\/wp\/v2\/posts\/17596\/revisions\/17703"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.socialpolicyconnections.com.au\/index.php?rest_route=\/wp\/v2\/media\/17597"}],"wp:attachment":[{"href":"https:\/\/www.socialpolicyconnections.com.au\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=17596"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.socialpolicyconnections.com.au\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=17596"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.socialpolicyconnections.com.au\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=17596"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\n\n\n\nIn defence of JobMaker, the replacement for JobKeeper: not perfect, but much to like<\/a><\/strong>.<\/h5>\n\n\n\n
\n\n\n\n1. Open it to all ages<\/h5>\n\n\n\n
2. Extend it beyond the unemployed<\/h5>\n\n\n\n
3. Allow additional employers to use it<\/h5>\n\n\n\n
\n\n\n\nBudget 2020: promising tax breaks, but relying on hope<\/a><\/strong>.<\/h5>\n\n\n\n
\n\n\n\n4. Ban \u2018harvesting\u2019<\/h5>\n\n\n\n
An improved simple model <\/h4>\n\n\n\n
\n\n\n\n![\"\"\/](\"https:\/\/images.theconversation.com\/files\/368238\/original\/file-20201109-13-jb7o61.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip\")
<\/a>
\n\n\n\nEither way, we\u2019re going to have to boost the economy<\/h4>\n\n\n\n
Matthew Cowgill<\/a> Senior Associate Grattan Institute<\/a>
Tim Helm<\/a> Senior Associate Grattan Institute<\/a><\/p>\n\n\n\n