The LNP Federal Government’s newly unveiled unemployment policy has heralded considerable backlash in the media and from opposition leaders who have criticised the idea as poorly researched, and lacking in common sense. Whilst unemployment recently reached a 12 year high of 6.4 percent, the proposal that Australia’s unemployed be forced to file 40 new job applications per month in order to receive their Newstart benefit, seems well on the way to ridiculousness.
I am keen to explore here what the impact of such a move would mean to SMEs of Australia. Additionally, why would the Government float such a logically flawed and easily criticised policy?
First, let’s look at the numbers. Summarising a well-researched article by leading Recruitment Industry Commentator Ross Clennett (published July 30; 2014):
• 26 occupations are considered to be in ‘skills shortage’ (as compared with 99 back in 2008)
• 146,000 vacancies (May 2014), down from 184,000 (May 2008)
• 720,000 unemployed/active job seekers (plus 920,000 ‘underemployed’ potentially $1.6million competing for vacancies); approximately 350,000 on Newstart allowance
• 40 new job applications per month; 10 per week
• 14,000,000 applications (40 x 350,000) each month from Newstart recipients alone;
• ~ 100 applications per vacancy per month from Newstart recipients.
This is the core reality of the Australian job market – job vacancies are trending down. The intensification of job-search requirements means people receiving Newstart will be coerced into applying for many jobs that they have very little chance of obtaining.
What does this mean for Australian SMEs?
We will be swimming in job applications from unsuitable applicants. Recruitment firms like HorizonOne who pride themselves on service and responding to every applicant in writing, will be forced to rethink this approach or incur a significant increase in costs.
To quote Ross Clennett:
“Has the government seriously considered the impact that this proposed policy will have on businesses who advertise jobs? Have they made even the slightest attempt to talk with the groups who will be most impacted by this moronic policy?”
No one suggests that the unemployed shouldn’t be doing what they can to find a job, but futile applications for non-existent jobs serve no purpose but to tick the boxes to receive a payment.
Speculation is rife about why a Government might take on such a counter intuitive, clearly flawed idea.
Here are some of the best guesses:
1. Political point scoring – Encouraging resentment of taxpayer-funded benefits flowing to people down the ladder of life’s fortune can deliver political dividends – though not all attacks deliver equally. (Peter Lewis & Jackie Woods, The Drum, ‘The politics of downward-envy’, ABC, 5/7/14)
2. Strategic precursor to dropping of the minimum wage – Is this the soft left jab before the powerful right hook? What better way to soften up the public for a politically unpopular move like dropping the minimum wage? This idea would well and truly be in line with the LNP Government’s policies focussing on big business.
3. A short term drop in the number of Newstart recipients – Further stigmatisation of the unemployed and more deterrents for applying for unemployment benefits would allow the government to report a drop in welfare spending. Naturally, this would merely drive the problem ‘underground’.
Whatever the rationale, as a recruitment service provider and small business owner, I sure hope common sense prevails!
Sourcing talent is a science, not a sales game