Prime Minister’s jobs target and the forgotten people

Prime Minister Abbott’s target of creating one million new jobs within five years is unrealistic unless artificial barriers to workers and employers agreeing mutually satisfactory wages are removed.

If September 2013 is taken as the start date for the creation of the one million new positions, then to meet the September 2018 deadline an 8.7% increase in employment will be required, a 1.7% annual average, almost double the current annual growth (to April 2014) of just 0.9%.

In addition the one million jobs target will not keep pace with the growth in the working age population and more will be required than the trade and deregulation stimulus on which the target is based.

Further the number of drop outs has grown to 197,000 for the year to April 2014, more than double the drop outs in the previous year.  The drop outs include those whose skills have deteriorated, who are no longer in demand or who are otherwise hard to employ.

It is the drop outs, the under-employed and unemployed youth who fall outside job ‘creation’, who in the words of the Reserve Bank are written off as ‘structural unemployment’.

Some of the unemployment structures are artificial and have nothing to do with markets, and thus can be changed.  These include employers not being legally permitted to offer wages below a minimum of just over $30,000 pa (the highest minimum wage in the world), constraining or prohibiting lower rates for lesser skilled youths, and weekend penalty rates.  It is these that can be changed by paring back the Fair Work Act.

The forgotten drop outs are owed jobs as well as the additional unemployed from the growth in the working age population.  In fact drop outs can be offered jobs if the artificial requirements for the minimum wage, for high youth wages and for penalty rates are removed from the Fair Work Act.  The Prime Minister’s jobs target needs to make these changes to be useful to both the drop outs and the unemployed.

Media Contact: Adam Bisits, 0438405527

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