Employment and income policy in Australia: Post COVID-19 implications Q&A

For youth, should we be promoting taking on more education – going to University, tafe, VET, etc? Is now a better time to encourage skill and education acquisition?
Yes, to some extent this is true and it is likely to happen anyway, but this “solution” may also have its problems in terms of the number of places available in tertiary education, and for those who have already completed tertiary education this is perhaps not viable. If more people continue education now than usual, we may also just push ahead an oversupply of labour market entrants.  

Previous news reports tell us women have fared worst, but numbers you present on reduced hours suggest women have fared better, while job loss due to covid is only slightly worse for women. Is there any explanation for this difference in reporting?
Sorry, that was due to the way I presented the numbers. I wanted the proportions in the graph to add up to one. If we want to look at how women who are in the labour force are affected, we need to express the women in unemployment as a percentage of the women in the labour force. Those in unemployment due to COVID make up 11% (0.08/0.73) of the labour force and those in unemployment for other reasons make up 15.1% of the labour force compared to 8.5% and 11% respectively for men. As a percentage of the labour force, women with reduced hours make up a slightly smaller proportion (by 2ppt) than men with reduced hours. This was what I was referring to.

Guyonne, you mentioned that the self-employed have been hit hard. We also have a large share of casual workers in Australia, who are officially still "employed" yet in September will become officially "unemployed". What do you suggest for the high share of casualisation going forward? Is it "safe" to continue to allow casuals or should we force "proper" employment with benefits?
I believe that when businesses do not survive, it does not matter whether you are casual, permanent, or fixed term, people would lose their job. It may be important for other reasons, and it is likely that more casual workers will lose their job than permanent or fixed-term workers. However, I do not think that in a crisis, more jobs are lost overall if there are more casual workers in the labour force. In a market with low confidence, employers may be more willing to hire someone on a casual basis initially. And, as the market moves out of recession, these jobs can hopefully transition into more secure jobs.

So what form should this required "general support" for employers take? That is, what types of policy measures did you have in mind?
This could be a more general wage subsidy that covers people who are currently not in the labour market or were not working with that employer pre-COVID, or it could be assistance in meeting the costs to comply with the many new regulations for businesses. This question and questions 7, 10 and 11 would require careful consideration and design to keep the administrative requirements as low as possible while preventing mis-use of support programs. At the start of the COVID crisis and lockdown, swift action was required to keep the economy from free-falling. As a result, the policies are of course not ideal but they achieved their goal. For the medium-term policies we should pay more attention to the details and aim to make the available funding stretch as far as possible and be as effective as possible. Over the next three months, time should be invested in designing policies aimed at transitioning out of the crisis (and I hope, and expect, that this process has started already).

What do you think about the role of the Victorian Government in creating new jobs?
A recession is a good time to invest in for example infrastructure, which would create jobs and facilitate future economic growth. This could be done by State and Federal Governments.

Which regions are the most affected? Is there any difference between regions?
We have not looked at this in detail, as we would want to distinguish between inside and outside of capital city by state, which would make the number of observations in some of the labour force states quite small and difficult to compare across regions. We suspect that there would be clear differences.

Supporting viable businesses makes obvious sense, but what about new businesses? In "normal" times businesses are entering and exiting all the time.
That is a good point, but I imagine that a new business would have the advantage of starting from scratch and can incorporate the changed circumstances in their business plan, and perhaps even jump into new opportunities that are arising as a result of the COVID crisis. That said, a policy to encourage new (and innovative) businesses would be helpful, but such a policy could probably provide financially more modest support than is required for businesses set up in pre-COVID circumstances who now need to change the way they work.

I may have missed it at the start, but how many people were questioned as part of the survey?
Apologies, I forgot to mention this, each week 1,200 respondents are interviewed. Weights are available to ensure the sample is representative of the Australian population.

Should we outlaw "zero hour" or entirely casual contracts? It only shifts all of the demand risk on to the employees, who are least able to fend for themselves. Wouldn’t it be better to have more responsibility on the side of businesses as a whole to insure against demand shocks.
There needs to be a balance between the needs and rights of businesses and employees. However, this is a more general industrial relations topic and falls outside the scope of this colloquium.

If you try to subsidise new hiring, how do you prevent windfall gains? -- subsiding firms that were going to start hiring again as economy re-opens anyway.
For the medium term, policies would need to be developed which are more complex than the current programs, and which will require more information to be provided by businesses and likely be a larger administrative burden.   For example, subsidies could be provided upfront; however these could then be income tested against the next financial year’s revenue/profit. This could help deal with temporary cash-flow issues and/or subsidise the hiring of new staff that would not be viable without the subsidy. The business would have to pay a proportion of the cost of each newly hired person themselves to avoid the hiring of staff where there is no productive work for them.  This is just one idea, and I am sure there are better ideas out there.

Since past history is no longer a guide to future performance, can you suggest what can be used to identify which is a viable business to support that faces reduced demand?
A good question, and this is not going to be easy, and is likely to be arbitrary to some extent, whichever approach is chosen, and of course there is not going to be any certainty about whether or not a business will survive in the end. However, I believe that a first step should be historical data to determine which businesses were already struggling before the COVID crisis; it is unlikely that these will be able to survive, and many of these businesses may already have closed down. As a second step, the government would need to determine what the maximum amount of time on support can be, and whether they expect the industry in which the business operates to be back to (close to) normal within that time. It is important to consider the best interests of the business and the employees within this business when designing support policies. Thirdly, government needs to estimate how much support would be needed to keep businesses in specific industries afloat, and whether that is an efficient use of funding to save jobs and keep the economy going.

Thank you for the presentation. Is there any indication that the workforce of 50 years and over are leaving the workforce in greater numbers than previous trends?
We have not looked at this, since we exclude everyone of 65 and over, who are probably the most likely to respond in this way. To answer this question, we would probably need to pool a number of months of pre-COVID and post-COVID data from the Consumer Attitudes, Sentiments and Expectations in Australia (CASiE) survey to compare numbers in the labour force in the two periods.

What is the best way to effectively connect the training system with the employment opportunities for young people?
This is a difficult question, and outside of my expertise. There is a large literature on the impact of different systems on outcomes for young people, including comparing the impacts of different systems during the Global Financial Crisis. For example, there is large variation amongst European countries.

The findings you report show individuals that are young or female affected. When addressing how to design supports, is it possible that the household, and role of head of household, could be useful to the influence of the supports – do you have any info on these aspects?
No, unfortunately we do not have information on the household composition of the respondent. Although this may be relevant for the immediate financial support to be provided, it would not change the support needed to (re-)enter the labour market, since young adults should be able to live independently from their parents, and economic dependence is not an ideal situation for partnered women (and men) either as it creates potential financial vulnerability down the track in case of divorce or death of the partner.

If child care is not being used for health reasons, will economic subsidies be very effective?
Not using childcare for health reasons is likely to be temporary and for a subgroup of families only. However, if on top of this, families cannot afford to keep their children in childcare, and/or childcare centres cannot keep their businesses viable with the number of families attending and the support provided, there is a risk that childcare centres need to close before everything is back to normal. An economic subsidy should help in this case.