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PHOTO: You would have to be deluded, or a member of the Cabinet, to think people are choosing to stay on Newstart payments. (ABC News: Nic MacBean)

When the Government starts relying on anecdotes and stereotypes over obvious facts to formulate its work for the dole policy, alarm bells should be ringing, writes Greg Jericho.

Anecdotes are great fun at a sportsman’s night, but when a government is using them to develop policy, they’re scary – especially when it affects the lives of some of the most vulnerable.

The Government’s new policy measures for the unemployed, announced on Monday by Assistant Employment Minister Luke Hartsuyker, encapsulate this Government’s belief in the anecdotes and stereotype over facts and well-researched policy.

Among the biggest changes are that jobseekers will have to apply for 40 jobs a month, and those under 30 will have to perform 25 hours a week of work for the dole, while those under 50 will have to do 15 hours.

The entire premise is based around the rather fact-free proposition that the reason most people are unemployed is because they are not trying hard enough to get a job and that somehow working for the dole and forcing unemployed to send out 40 applications a month will improve their chances of getting paid work.

Given the Government is spending about $5.1billion on its policy, one would hope it was supported by extensive research. But alas, no.

Mr Hartsuyker dismissed research on work for the dole that has shown it doesn’t work and can actually hinder the ability for jobseekers to get a job as “very old”. This “very old” research covered the Howard government’s work for the dole scheme, which the Government lauds as a success.

One can only suggest as well that Mr Hartsuyker is ignorant of research into the UK work for the dole scheme done only two years ago in 2012 that showed it has utterly failed.

Instead, Mr Hartsukyer preferred the anecdote, saying that “the information that I get as I get round the country is that jobseekers who participate in work for the dole find it a rewarding experience, an experience that often leads directly to a job.”

In his Lateline interview the Minister for Education, Senator Eric Abetz also took this line, suggesting that “the anecdotal evidence of people … especially in the Howard era” showed that it worked.

To paraphrase Tim Minchin, if anecdotal evidence was any good, it’d be called evidence.

Anecdotes are great for talkback radio hosts, or newspaper editors who think eradicating “passive welfare” is more important than creating a policy that helps unemployed get work, but one would hope a minister with the resources of the Department of Employment at his disposal might actually care about research rather than relying on a few blokes during a workplace visit telling him what they knew he wanted to hear.

I wrote recently that one problem with punitive measures for the unemployed is there is currently a pretty tough fight for jobs – nearly five unemployed per job vacancy nationally, and in South Australia and Victoria there are 7.2 and 6.3 unemployed per vacancy.

Moreover the current rate for Newstart is $510.50 a fortnight – $13,273 a year. Given anyone earning less than $19,700 after tax is in the bottom 10 per cent of Australian households, those on Newstart are among the poorest of all Australians.

You would have to be either extremely deluded, or a member of the Cabinet to think people are choosing to stay on such an income.

But such delusions aside one of the other problems is that the measures announced are mostly designed to fix a problem that doesn’t exist, because given the scarcity of jobs available the level of unemployment is consistent with what it has been in the past.

Senator Abetz might like to think that “when jobs are sparse, it means that you’ve got to apply for more jobs to get a job”, but the reality is people are more likely to get a job if there are more jobs on offer (bizarre I know!).

The key issue is the level of unemployment compared to level of job vacancies. One way this is measured is using the “Beveridge curve“. This charts job vacancies against the unemployment rate.

When there is a problem for people getting work, the unemployment rate per job vacancy rate increases.

This occurs when either there are not enough people with the right skills to do the jobs on offer, or because people are not getting those jobs for other reasons – such as distance, possibly regulations involving accreditation, and possibly (if you want to go into anecdotal talkback host mode for a moment) because life is so easy living on Newstart that people are choosing not to get a job.

But as you can see, Australia’s Beveridge curve over the past 20 years has gone along a pretty predictable and almost linear path – more job vacancies, less unemployment , and vice versa:

But between 2009 and May 2011, the curve seemed to shift out a bit – suggesting something unusual was going on. The Reserve Bank last year noted the major reason was the large increase in mining jobs at that time that were not filled due to the skills shortage – so a lot of jobs but not people with the right skills to fill them.

However, since November 2011, the slope of the curve has been steeper than usual. This is actually a good thing as it suggests a more efficient jobs market.

As the RBA noted in its November 2013 statement of monetary policy, “the significant decline in the vacancy rate since mid 2011 has coincided with a smaller increase in the unemployment rate than the average historical relationship would have indicated.”

And the latest figures in May has the level of job vacancies and unemployment rate pretty much bang on, if not a bit better than, the 20 year average.

One of the reasons for this is that the decline of the jobs in the mining sector has also led to a decline in skills shortage.

The Department of Employment’s most recent skills shortages update showed that in 2013 there were fewer occupations with skill shortages in Australia than at any time since 1999:

The Department’s figures also show that the requirement to fill out 40 job applications a month is not needed.

In 2013 there were more people on average applying for each application than any time in the past six years. But that is not the important figure – the important one is the number of “suitable” applicants – and that rose as well in 2013.

And even better, the percentage of vacancies that were filled was also at its highest levels for six years.

The Department noted, “employers recruiting in 2013 generally filled their vacancies with ease and had large fields of applicants from whom to choose.”

As the Business Council of Australia has noted, all the 40 applications a month will do is increase the average applications for each job, create more work for employers having to sift through the chaff and do nothing to raise the number of suitable applicants.

The way to improve a person’s chance of getting a job is to assist them to be one of the “suitable applicants”.

But when he was asked on Monday if jobseekers’ time would be better spent in training, Mr Hartsuyker replied, “It’s most important that jobseekers look for work. There are training options available under this job service model but a jobseeker’s primary responsibility is searching for that all-important job.”

Such a pity then that they’ll have to use up 25 hours a week doing menial tasks that provide them with little help searching for or getting that all-important job, purely because the Government prefers anecdote to facts.

Source: ABC

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