At a glance
Deloitte Access Economics lead partner, macroeconomic policy and forecasting
More than 920,000 Australians are currently looking for a job, but unable to find one. Shockingly, this is more people than the populations of Canberra, Hobart and Darwin combined.
We have enjoyed an enviable period of economic growth and low unemployment over the past three decades, but within a few short months in 2020, that period of prosperity has become a thing of the past.
Ideally, we will do this through private enterprise.
Despite the current recession, companies are adapting to the changes in the way we work, live and seek entertainment, and employers are already seizing growth opportunities to invest and expand their businesses to generate ever-greater value to society.
However, the private sector can’t shoulder the entire burden at this point in time, and so it falls to the public sector to provide temporary job-generating economic support via the likes of infrastructure big and small, and projects that can start now, as well as those that require longer lead times.
This will come at a cost to the taxpayer of tomorrow, but that cost is small relative to the benefit it can bring to our nation today.
John Loy CPA
Finance director, HireUp
Australian Treasurer Josh Frydenberg recently announced that the federal budget will remain in deficit until we see unemployment rates comfortably back under 6 per cent.
This means at least four more years of deficit. However, looking at it through rosier glasses, it also means four more years of disproportionate investment into the economy.
In the last recession, nearly 30 years ago, certain age groups were particularly disadvantaged when it came to unemployment. Older Australians couldn’t change careers easily because of the time requirement for training. Younger Australians also struggled to gain employment, as companies moved away from graduate programs.
Today, we must prevent history repeating. We need to make sure that necessary investment has the maximum impact on the groups most in need.
How can this be done? Let me give you an example close to Hireup’s heart. The disability sector, underpinned by the A$22 billion National Disability Insurance Scheme (NDIS), is the perfect vehicle to drive the unemployed – whether old or young – into the workforce.
The minister for the NDIS, Stuart Robert, recently announced that 100,000 new jobs will be created as we approach the full expansion of the NDIS.
If we focus on promoting diverse employment pathways into the NDIS, including those for younger and older Australians, we will see more jobs and less unemployment. These jobs will not only ensure the full utilisation of the NDIS, but they’ll also support the recovery of the broader Australian economy.
At a time when investment needs to drive the economy, wise investment will be paramount.
Professor of economics and director of the Centre for Market Design, University of Melbourne
The first order of business must be to bring back business and to avoid large-scale bankruptcies of firms, small and large. If the employers are still there for new and former employees to return to, employment will bounce back. If they are not there, it won’t.
With that in mind, the top priority ought to be to end lockdowns and to make sure that, in future flare-ups of COVID-19, more moderate and appropriate measures are taken and more reasonable targets are set.
As far as policies directly targeting labour markets, facilitating labour market entry for young graduates seems a high priority. These young adults bear a disproportionate burden of the policy responses to the pandemic and have enjoyed no benefits from programs such as JobKeeper.
There is a tendency in current policymaking, of thinking every malaise can be fixed if government only pours enough money into it.
However, just like no amount of mental health healing is going to be a substitute for the experience of getting together in school yards, parks, on football fields and beaches, no wage subsidies can make up for jobs that are no longer there because businesses went bust.
As for wage subsidies for employing the young, it seems worth considering making at least part of the subsidy a fixed upfront payment to the firms hiring young employees, to mitigate the financial distress these firms are exposed to, and to bring them back from the brink of collapse.
Meet the experts
Kristian Kolding is lead partner, macroeconomic policy and forecasting at Deloitte Access Economics. He specialises in the application of macroeconomic analysis and forecasts to inform policy decisions, corporate strategy, transaction due diligence and stress testing.
John Loy CPA
John Loy CPA is finance director at Hireup, an online platform that gives people with disability and their families the power to find, hire and manage support workers who fit their needs and share their interests.
Simon Loertscher is a professor of economics and the director of the Centre for Market Design at the University of Melbourne. His research focuses on market design, industrial organisation and antitrust activity.