Suspending welfare payments won’t help young people get jobs

The Australian government wants to suspend welfare payments to unemployed young people who fail to turn up for mandatory training sessions.

The belief is that this will help to tackle persistently high levels of youth unemployment. The rate is around 12% nationally, and up to 28% in some communities.

The proposal includes introducing arbitrary waiting times of around a month before young people can receive unemployment benefits, and having the option to suspend payments for those who don’t turn up for back-to-work training.

This policy proposal, however, is unhelpful and out of step with the evidence about the nature of contemporary youth unemployment. And if it’s implemented, it’s likely to aggravate the poverty that young unemployed people already experience, with no benefit to themselves or their communities.

Economic problem

Youth unemployment is not a problem within young people themselves, but is a structural feature of our economy.

High youth unemployment is a global phenomenon, and countries such as Australia have seen elevated levels of youth unemployment for decades.

Young people are particularly vulnerable to changes in the national and global economy. In Australia, high youth unemployment emerged as the economy shifted from one based on manufacturing to one based on services. This eliminated the need for large, relatively low-skilled labour forces, and with it a key source of employment for many working-class youth.

Young people most affected

Youth unemployment is disproportionately experienced by young people who come from disadvantaged family or community backgrounds.

Aggregate levels of youth unemployment hide what recent research has called “youth unemployment hotspots”, or particular communities, often in regional areas, in which youth unemployment is particularly high.

These hotspots are those in which traditional local industries have declined in economic significance – or have reorganised in such a way as to no longer require large labour forces – and in which there has not been sufficient investment in local industries to provide jobs.

This is an international phenomenon. Youth unemployment is related to inequality and poverty, as well as shifts in the social and economic fabric of our society.

Game of snakes and ladders

It is for this reason that carrot-and-stick approaches to unemployment have a poor track record internationally. Such policies often result in what UK research describes as a game of snakes and ladders in which young people cycle in and out of short-term training schemes, casual employment and periods of unemployment.

Since, as recognised by the OECD, youth unemployment is a problem of demand (ie, a lack of jobs), these initiatives merely punish those young people who are most vulnerable to poverty.

Training programs not well recongised

Training schemes associated with receipt of welfare benefits, and “work for the dole” schemes more generally, are not always recognised as meaningful qualifications in the labour market. Young people themselves often experience such schemes as demeaning “busy work”.

The proposed arbitrary waiting period for unemployment benefits is particularly worrying, since it will place young people who can’t get material support from their families at risk of further marginalisation and homelessness.

It is important to note that while post-compulsory educational qualifications are a critical factor in young people’s labour market experiences, calls to restrict young people’s access to welfare come at a time when government provision of education and training to young people is under threat.

The federal government has recently curtailed efforts to reduce the inequalities in educational funding to schools by abandoning the Gonski reforms proposed by previous governments. TAFE funding is being put in jeopardy in New South Wales – a state that is home to some of the most significant youth unemployment hotspots (such as the Hunter Valley). These changes are unlikely to assist young people to find fulfilling work.

What next?

Contemporary economies are now growing while simultaneously failing to create employment for many.

There must be a commitment to creating meaningful jobs in communities that are hard hit by youth unemployment. This will require significant government investment, as well as critical reflection on the nature and social purpose of work itself in a society where many are increasingly positioned as surplus to the requirements of our economy.