Jobless families need work

An economic downturn should be no excuse to lose the ground we have already won in reducing the number of jobless Australian families.

Despite Australia coming off the back of a remarkable economic boom and enjoying historically low unemployment rates, in late 2008 almost one in eight Australian children lived in a family where no parent worked. Unbelievably, this figure is actually a marked improvement: family joblessness reached its peak in the mid 1990s when more than one in six children lived in jobless households.

Despite this improvement, the statistics on family joblessness paint a depressing picture.  Australia has the second highest proportion of jobless families in the OECD.  This represents a considerable social and economic cost to Australia, but the biggest cost is borne by the children of jobless parents, who are significantly disadvantaged relative to their peers.   The personal cost to these children, who grow up without the positive influence of a working parent to teach them about responsibility and discipline, and instil them with a sense of ambition and self-determination, cannot be underestimated.

Family joblessness leads to welfare dependency and child poverty, and inferior health, social and developmental outcomes for children.  Consequently, there is a broad consensus that the high level of family joblessness in Australia is unacceptable.

Despite Australia coming off the back of a remarkable economic boom and enjoying historically low unemployment rates, in late 2008 almost one in eight Australian children lived in a family where no parent worked. Unbelievably, this figure is actually a marked improvement: family joblessness reached its peak in the mid 1990s when more than one in six children lived in jobless households.

Despite this improvement, the statistics on family joblessness paint a depressing picture.  Australia has the second highest proportion of jobless families in the OECD.  This represents a considerable social and economic cost to Australia, but the biggest cost is borne by the children of jobless parents, who are significantly disadvantaged relative to their peers.   The personal cost to these children, who grow up without the positive influence of a working parent to teach them about responsibility and discipline, and instil them with a sense of ambition and self-determination, cannot be underestimated.

Family joblessness leads to welfare dependency and child poverty, and inferior health, social and developmental outcomes for children.  Consequently, there is a broad consensus that the high level of family joblessness in Australia is unacceptable.

With unemployment rising, it seems likely that the number of jobless families could again begin to increase too.  The lessons of the past, however, suggest that it is not only economic conditions which impact on the level of family joblessness: Public policy also plays a vital role.  Heeding the policy lessons of the past will limit the damage inflicted by rising unemployment and a slowing economy, and perhaps even ensure the number of jobless families keeps falling.

• Reductions in the tax burden faced by workers will provide an incentive for jobless parents to move from welfare into work, as they will get to keep more of their new income. Despite budget pressures, the Rudd government must not abandon its commitment to tax cuts;
• A robust ‘welfare to work’ regime sends the message that everyone who can work should do so, providing assistance for jobless parents to find work and penalising those who don’t. Tougher welfare rules implemented over the past decade have certainly contributed to the drop in family joblessness. The Rudd government should resist winding back mutual obligation requirements, which will inevitably cause the number of jobless families to rise;
• Any attempt to tackle family joblessness must include the continued reform of the labour market. Wage setting and industrial relations policies must be governed by a ‘jobs first’ policy, with a key objective being the continued creation of low-skilled jobs. During a downturn, it is preferable for people to have the option of lower-paid jobs, rather than simply being forced onto the unemployment queue.

The number of jobless families has been dropping but as the country slides into recession, there is a danger that that these gains will be reversed.  If tax, welfare, and labour market reforms are wound back, this danger will become a certainty.  While the recession seems inevitable, good public policy means that a jump in the number of jobless families needn’t be.

Jessica Brown is a Policy Analyst at the Centre for Independent Studies.  Her paper "Breaking the Cycle of Family Joblessness in Australia" is released by the CIS this week (http://www.cis.org.au/policy_monographs/pm95.pdf).