JobMaker scheme fails youth as super accounts drained and JobKeeper bypassed gig economy

by | Apr 9, 2021 | Economy & Markets

The Coalition government’s signature employment policy for young people JobMaker has created just 609 jobs. And thanks to the flawed design of JobKeeper, which shut out many young people from key financial support, superannuation accounts were emptied, for which the young will pay a heavy price down the track. Kathryn Daley, Belinda Johnson and Patrick O’Keefe report.

​Prime Minister Scott Morrison has enthused about there now being “more jobs in the Australian economy than there were before the pandemic”.

But that’s true only for those 25 and older: 77,600 more are employed than before the crisis. For those aged 24 and under, 74,100 fewer have jobs.

While the flawed design of Jobkeeper hit young people particularly hard, the one program the Coalition announced to specifically tackle youth unemployment, the JobMaker Hiring Credit, has so far proven a failure. It has led to just 609 hires as Treasury officials revealed late last month.

JobMaker offers employers a weekly $200 subsidy to hire job seekers aged 16 to 35, and was expected to create 450,000 jobs over two years.

The pandemic clearly hit younger workers the hardest. Of the more than 870,000 Australians who lost their jobs in the first few months of the Covid-19 crisis, 332,200 – or 38% – were young Australians aged 15-24.

By June 2020, as the overall unemployment rate hit 7.4%, the youth unemployment rate spiked to 16.4%, with a further 19.7% underemployed.

The reasons young people were hit so hard are pretty clear. Young people are more likely to work in casual jobs – the first to be cut in hard economic times – and more likely to work in sectors most affected by border closures, lockdowns and other measures – retail, hospitality, tourism.

Flawed design of JobKeeper

Moreover, the flawed design of the federal government’s key support measure, the $100 billion JobKeeper program, exacerbated the negative effect on young people.

To qualify for Jobkeeper, employees had to have been working for their employer for a minimum of 12 months. This disproportionately excluded younger workers, who are more likely to be recent entrants to the workforce, more likely than older workers to switch jobs and more likely to be employed in casual or other insecure work.

Australian Bureau of Statistics figures from August 2019 show that while young people comprised 17% of the workforce they accounted for 46% of all short-term casual employees.

And of those young people employed casually, 26.4% of had been with their employer for less than 12 months, compared to 6.5% of those aged 25 and over. So one in four young people employed casually were not eligible for JobKeeper, compared with just one in 16 of their older counterparts.

JobKeeper’s design therefore pushed proportionally more younger workers on to the unemployment queue and likely contributed to more of them dipping into their superannuation – a policy that will cost them up to $100,000 over their lifetime.

Young Australians told to be resilient as COVID-19 wipes out jobs and housing hopes

The federal government introduced provisions early on in the pandemic to allow Australians affected by the economic crisis to withdraw up to $20,000 from their superannuation accounts (in two rounds of $10,000 each – one last financial year, another this financial year).

According to estimates by financial comparison site Canstar, the long-term cost of a 25-year-old withdrawing $20,000 from their superannuation is more than $100,000, compared with about $37,000 for a 50-year-old.

Superannuation accounts drained

Industry Super Australia has estimated that about 395,000 people under 35 completely drained their super accounts.

All unemployment is costly for individuals, families and the community. But high and long-term youth unemployment can have particularly dire consequences that reverberate for decades. It creates the risk of “scarring”, suppressing an individual’s job and income prospects over their entire life.

Youth unemployment was already a significant issue prior to the Covid crisis. Now, with younger people hit hardest by the pandemic’s economic impacts, it’s imperative to ensure an entire generation is not permanently disadvantaged.

Cuts to JobSeeker, Jobkeeper: out of the frying pan and into the fire

This is an edited version of an article first published in The Conversation.
is a Lecturer and Program Manager, Social Science (Psychology), School of Global, Urban and Social Studies, at RMIT University.
is a Lecturer, Bachelor of Youth Work and Youth Studies at RMIT University

Kathryn Daley is a senior lecturer and a program manager in the School of Global, Urban and Social Studies at RMIT University. She researches issues to do with youth, social policy and chronic disadvantage. Her book, 'Youth and Substance Abuse', was published by Palgrave UK in December 2016.

Belinda Johnson is a lecturer and Program Manager, Social Science (Psychology) in the School of Global, Urban and Social Studies at RMIT University. Her main areas of research are: disability and carers; and precarious work.

Patrick O'Keeffe is a lecturer, Bachelor of Youth Work and Youth Studies at RMIT University

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