Protecting Jobs & Incomes through the COVID-19 economic downturn

Image: AAP

This isn’t like the normal boom and bust pattern of capitalism — this is something completely different and much worse.

What’s the government doing for workers?

There are pros to the wage subsidy package — but there are some pretty major cons

On the positive side:

  • The government has cast the net fairly widely to cover most workers, including sole traders and some casual workers
  • The flat-rate structure of the subsidy means if you’re a low-wage worker or a part-time worker, you’re going to get a very good rate of wage replacement — even if you can’t work. In fact, many part-time workers will make more money than they did when they were working
  • Because this money flowing quickly to employers, it will prevent many stand-downs or mass dismissals of workers — remember, the goal here is to try and prevent a huge surge in unemployment — and stop Centrelink offices from becoming totally overwhelmed.

The cons (there are some pretty big ones):

  • Anyone who’s a casual worker who hasn’t been with their current employer for 12 months or more — that’s 1.1 million people that will be excluded.
  • And if you’re a foreign visa worker (other than those who come from New Zealand), you are also not eligible. Foreign visa workers won’t qualify for Centrelink for the JobKeeper payment either.

There is no good reason for those casuals or foreign workers to miss out, for those two very large groups to be excluded from being eligible for the wage subsidy package.

  • $1500 per fortnight looks good if you’re a part-time worker. It doesn’t look good if you were earning a full-time wage. It’s only 55% percent of the median full-time wage. So for a lot of people, it’s going be very hard to live off this.
  • The subsidy is paid to businesses, without clear rules and clear protections. There are various ways that this wage subsidy package needs to be strengthened to prevent employers from doing things that go against the purpose of the policy. For example, you may see employers using part-time workers (who they can basically hire for free because the $1500 will cover their whole wage) and using them to replace full-time workers, who the employers would still have to pay using a bit of their own money. Or, employers could cherry-pick who in their own workforces ‘deserves’ this payment and to be kept on and who they want to let go?

Could this current crisis turn into a 1930s-style depression?

We’re already seeing employers say that we should freeze the minimum wage. That is exactly the same argument (and mistake) that was made in the 1930s.

We are going to need something much bigger and led by the public sector to rebuild and reconstruct the economy.

We should be thinking of the post-pandemic recovery very much as a kind of post-war reconstruction.

The private sector is going to be in way too bad a shape to lead a normal recovery just by business investment and consumer spending. The public sector is going to have to lead.

How are we ever going to pay down this debt?

In the coming years, we’ll probably see public debt grow towards 100% or even more of Australia’s GDP.

This isn’t something to worry about, this is actually something to celebrate.

It shows that the government and public agencies have the capacity to make the investments and spend the money that’s required, to help people through this.

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an independent think-tank based in Canberra > australia.org.au

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The Australia Institute

The Australia Institute

an independent think-tank based in Canberra > australia.org.au

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