Australia Needs Unemployment Insurance Says Jobs Australia Report

Jobs Australia has released a report calling for discussions on introducing unemployment insurance in the face of entrenched high unemployment.

A Proposal for Unemployment Insurance, released by the peak body for Not for Profit employment service providers and authored by Deakin University professor Andrew Scott, claims UI would give people who lose their jobs a better chance to re-skill and rebound back into the labour market.

According to the report, Australia’s superannuation system is well-placed to introduce UI, which it claims would ultimately generate savings on welfare expenditure.

Jobs Australia CEO David Thompson AM said Australia needed to discuss UI given the low rate of Newstart payments.

“The problems of entrenched high unemployment in Australia, and the need to improve the support given to people who are affected by unemployment, require new thinking and new ideas in order to bring about policy change,” Thompson said.

“Unemployment insurance would mean that people who lose their jobs aren’t immediately thrust into poverty.

“When people go from a wage onto below poverty-level Newstart payments, things like paying the mortgage or rent and other bills become an immediate problem.

“Instead of going straight from a living wage to $255 per week, workers with unemployment insurance would have six months at something like 60 per cent or 70 per cent of their previous wage.

“This would give those workers time to sort themselves out and undertake training, obtain new and suitable employment, or even start their own business.

“This is the type of reform that could help people get back to work without adding huge expense to the federal budget.”

According to the report, many countries in the OECD already have unemployment insurance, and those that do typically have higher levels of labour force participation than Australia.

The key features of unemployment insurance are:

• premiums are paid by employers on behalf of workers
• there is a qualifying period before UI benefits can be paid (such as 12 months of employment)
• when workers become unemployed, they can be paid up to a certain percentage of their previous salary for a short time (such as 60 to 70 per cent of previous salary for six months).

The report said the proposal was the circuit-breaker needed to catalyse further policy changes.

“We have insured against old age, illness, workplace injury, and disability,” the report said.

“It is logical that we now similarly insure against the periods of unemployment or intervals between particular paid jobs, and for the periods of reskilling, which will increasingly be part of our future economic disruption.

“This will mean that instead of being tipped into a pit of poverty and despair when one job is lost, and being left desperately scurrying for any alternative form of short-term employment and income which will help them to climb out of this quickly, workers can retrain for quality work to which they are suited, as part of their ongoing career, in a way which sustains their long-term workforce participation.

“This proposal is the circuit-breaker now needed to catalyse further policy changes towards the wider provision of adequate income and skills retraining support for the unemployed in Australia.”

Thompson said the reform should be discussed alongside debates about the adequacy of Newstart Allowance and other ideas such as the Universal Basic Income.

“This doesn’t replace the need for strong public provision for those most in need. Not all workers will meet the requirements for unemployment insurance so we still need to do something as a matter of urgency about the below poverty-line rate of Newstart,” Thompson said.

“The poverty line for a single adult in the OECD is $358 per week, so we need to be doing more for people on the Newstart allowance who are expected to live on $103 per week below that line.”

Jobs Australia said calls for unemployment insurance would fit with the prime minister’s statements about the need for agile adaptation.

“The current political situation is that Prime Minister Turnbull is seeking re-election; he needs to take some inclusive steps to respond to the plight of working people vulnerable to job losses, and he has been using language about the importance of enabling workers’ widespread greater agility and adaptation,” the report said.

“This provides a rare policy window of opportunity through which ideas for unemployment insurance in Australia can now advance.

“A specific proposal for unemployment insurance fits precisely with the prime minister’s general statements about the need for agile adaptation to the realities of increased employment disruption.

“The long-term unemployed now should receive a direct increase in Newstart, while the national government in Australia, after the 2 July 2016 election – whichever political party or parties form it – should consider provision of unemployment insurance.”