Source : Perth Now news
Higher unemployment benefits could result in unemployed Australians being less likely to look for a job, according to new research.
The e61 Institute research based on Aussies and Kiwis living in Australia during the pandemic showed Australians were less motivated to get a new job than New Zealanders who could not receive the Covid-era JobSeeker payment.
According to the study, both groups faced the same job market and health challenges, but only Australians could receive unemployment payments.
e61 Institute research found the additional Coronavirus payment of $550 more a fortnight introduced by the then Morrison government was enough to reduce time it took to find a new job by 19 per cent.
The temporary Covid benefits came as Australia’s unemployment rate soared to 13.7 per cent in April., 2020.
This subsequently fell to 7 per cent in July 2020 as the government introduced the $89bn JobKeeper wage subsidy and a freeze on business insolvencies.
“People eligible for the JobSeeker coronavirus supplement were less likely to find jobs than those who were not. This tells us that higher benefits reduce the incentive to work,” said e61 Institute research manager Dr Matt Nolan.
“This does not mean the supplement was bad policy as it was designed to help households and limit the spread of disease during the pandemic.
“But it tells us that raising benefits will lead to people spending more time out of work.”
The research showed, due to heightened uncertainty and government lockdowns, a near doubling of benefits had an unexpected effect on labour supply.
They say a combination of extremely low labour demand and self-isolation had already discouraged the workforce.
The study also found a 64 per cent increase in the number of eligible people who quit their jobs due to the rise in supplement payments.
But e61 Institute said there was a case for higher unemployment payments.
“While potential labour supply responses should be considered when evaluating changes to benefit rates due to the increase in fiscal costs, a reduction in labour supply does not undermine the justification for increasing payments,” Dr Nolan said.
“Beyond serving as insurance against job loss, unemployment benefits play a vital role in preventing poverty and maintaining a social safety net.”
Meanwhile, a separate report by ACOSS published in late November urged the government to increase Jobseeker rates in line with the pension arguing the current levels mean Aussies can’t afford the “basic essentials of life”.
The Australian Council of Social Service shows the current JobKeeper payments are “woefully low” with recipients choosing which of the 23 basic essentials in life to do without. These include skipping meals, paying for clothes or basic medical treatments.
ACOSS chief executive Cassandra Goldie said the current Jobseeker and Youth Allowance payments were so “woefully low that people can’t afford the basic essentials of life”.
“People receiving income support are experiencing multiple material deprivation at rates that far exceed the general population,” she said.
JobSeeker payments were last increased by $15.30 for a single person over 22 with no children to $778 while a couple will get $712.30 per person in September 2024.
