Friday, 16 May 2014

Two "Solutions" For The Same Predicament

In the Australian budget released this week, Joe Hockey outlined two measures to try to get groups associated with higher unemployment into work. For those over 50 and unemployed, the government will provide a financial incentive to employers to hire them - up to $10,000 if they remain with the employer for 2 years. For those under 30, however, anyone who is unemployed will face 6 months a year without any benefit, including an initial 6 month waiting period.

The rationale, at least how it seems prima facie is this: When it comes to older workers, the problem is the free market discriminates unfairly. When it comes to younger workers, however, the problem is the youth themselves, who by the implication of the exercise are simply unwilling to do that it takes to have sustained employment.

Both solutions are recognitions of the failures of the current private sector model we have for employment. The idea of seeing unemployment benefits as some sort of entitlement misses the reality of the job market. If everyone who wanted to work was able to get a job by the sheer desire to have a job, we wouldn't need to address the issue. But there are biases, employers discriminate, and these patterns of discrimination can be hugely problematic for those caught up in them. There's a reason that people who become long-term unemployed stay long-term unemployed.

This is a failure of governance, and a perennial failure at that. There's no point in laying the blame on Joe Hockey and the Liberal Party of Australia just because they happen to be the government in charge, but it applied just as much to Wayne Swan and Labor before that, and will apply to whomever comes next. The free market, like any other solution, is a means to an end. We recognise the limits of the free markets by practices such as a social safety net, government incentives, discrimination laws, etc.

I'll say now that I'm very sympathetic to the idea that young people should be in training. I'm also sympathetic to the idea that people should move for work. Yet what policy came with the policy to cut off unemployed youth from social security? And for that matter, what policy is there to help those evicted when they lose their income? Or even to ensure that the youth have stable employment such that they will be able to get housing to begin with?

Framing youth unemployment as an entitlement issue, I think, is a mistake. It's a survival issue - that a group of vulnerable people who are having a hard time entering the workforce to begin with are now being threatened with ruin for circumstances that are largely beyond their control. To say it's politically-charged rhetoric that shirks the responsibility of government would be a dispassionate way of describing the policy.

Whether it's the best of all possible systems, we live in a system where we depend on money. Take that away and you take away the ability to survive. And when it comes to the poor, it's not like the money is disappearing from the system. People who live on the edge tend to redistribute that money back into the economy because they need to spend all their money just to survive.

Over on Crikey, I saw this described as class warfare, but it goes beyond that. Health and education cuts are class warfare, allowing universities to price education away from the poor is class warfare, raising the age one qualifies for Newstart is class warfare, introducing mandatory co-payments for medical access is class warfare, allowing people to salary sacrifice their lifestyle is class warfare. This goes well beyond that - putting people potentially into harm's way for the crime of being young and not being able to find a willing employer.