Let’s fix youth unemployment once and for all

The latest youth unemployment figures are startling. The highest percentage of 15-24 year olds in a decade is jobless.

The evidence is in. Mandatory minimum wages have locked a significant portion of an entire generation out of the workforce. Surely these latest figures must shock the Federal Government into action.

It is unacceptable to have a youth unemployment rate more than double that of the overall figure. Employment Minister Eric Abetz is quoted in The Australian today saying that the rising youth joblessness is his greatest concern with the latest labour data from the ABS. The solutions he proffers today are further government subsidies to and a renewed commitment to “Work for the Dole.”

The time is long past due for a meaningful solution to out of control youth unemployment in Australia. Government subsidy after government subsidy and increasing the burden on the taxpayer will not address the problem. It has been tried for decades now, the problem persists.

Government can only be the solution in one way, by removing the shackles from business. Only by removing the disincentive to employ youth will the jobless figures shrink. If the Federal Government is serious about fixing the problem, it must cease tinkering around the edges with subsidies and welfare programs. Now is the time to rectify the underlying problem and remove the shackle that is the minimum wage. Do we want a small few being paid what the government tells businesses they can afford? Or do we want the great many earning a fair and competitive wage that business can actually afford? Unless we are content with permanently locking youth out of employment, something has got to change. If youth unemployment really is a great concern to the Federal Government and it wants to reduce joblessness, the best thing it can possibly do is get rid of the regulatory barriers it has put in place. The minimum wage isn’t helping our youth; it is hurting them quite badly.

James Duncan is Administration and Research Officer at  the H. R. Nicholls Society

 

An Important Lecture on Econ & Political Problems

We are in the midst of an election campaign where much concern is justifiably being expressed about the paucity of serious policy announcements by either major party – not to mention the paucity of most of those that have been announced. Perhaps the most important serious announcement has been by Abbott – if elected the Coalition will not increase the burden of taxation (that is, the proportion of tax to GDP) – but this has hardly been discussed.

Nor has much attention been given to the excellent Stan Kelly lecture given on 15 August by the former head of the Productivity Commission, Gary Banks. The occurrence of that during the election campaign is entirely coincidental. Even so it deserves much more attention because it identifies the need for major policy changes, both economic and political, to reverse the trend in recent years for government policies to become much more accommodative to special interest groups. Protective arrangements of various kinds now extend to a wide range of industries and these arrangements are reducing productivity and economic welfare generally. Just as importantly, it identifies a major problem with the political process now prevailing in Australia. Read more

Should we increase Youth Wages?

The Shop Distributive & Allied Employees Association has a television advertisement out at the moment. It features a young girl, Rachel, bemoaning youth rates of pay and urging us to join her in the “fight for fair pay”. Rachel tells us she works hard to pay her way through university and it is just not fair that she does not get paid more. Perhaps a persuasive emotional tale on its own, but it is a misleading one that completely ignores empiricism. Read more