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Australia’s Welfare System Is Designed to Force the Unemployed Into Low-Wage Casual Work

Australia’s unemployment benefit is one of the lowest in the OECD. This isn’t just a by-product of austerity politics — it’s designed to force the unemployed into low-paid, casual work, undermining wages and conditions across the board.

Australian prime minister Scott Morrison during a press conference at Parliament House in Canberra, Australia, 2021. (Rohan Thomson / Getty Images)

Last week, Scott Morrison’s Coalition government announced it will scrap the COVID-19 Disaster Payment. This change will come into effect once states and territories reach a double-dose vaccination rate of 80 percent for those aged sixteen years and older. Introduced in June 2021, the COVID-19 Disaster Payment provides between $450 to $750 per week to workers who lost at least ten hours of work due to a COVID lockdown measure.

This cut in federal support will occur regardless of whether lockdowns are still in place. New South Wales and Victoria, which account for more than 90 percent of the $9.25 billion spent on the scheme, are expected to reach the 80 percent vaccination target by late October and early November respectively. At that stage, those receiving the COVID-19 Disaster Payment will have to apply for the $44 per day JobSeeker poverty payment if they wish to continue receiving government support.

There are 1.5 million people currently receiving the COVID-19 Disaster Payment, and 1 million receiving payments from JobSeeker. Assuming most people who receive the COVID-19 Disaster Payment transition to JobSeeker, this may mean more than 2 million people will be on unemployment benefits. Official statistics underestimate Australia’s unemployment rate, placing it at 4.5 percent. The massive growth in JobSeeker claims that will inevitably follow the winding down of the COVID-19 Disaster Payment will make this already conservative figure appear even more implausible.

For unemployed workers, the result will be poverty. Employers, by contrast, stand to benefit.

Employer Offensive

Indeed, the Coalition’s plan to cut the COVID-19 Disaster Payment has employers’ fingerprints all over it.

In part, the Coalition’s decision to scrap the COVID-19 Disaster Payment is intended to pressure state governments to end lockdowns and reopen their economies, regardless of public health risks. Immediately after announcing the plan, the Coalition also announced a multibillion-dollar support package for employers in New South Wales, Victoria, and the Australian Capital Territory. Predictably, Big Business is backing the Coalition’s plan to the hilt, echoing its “fiscal restraint” line.

Beyond this, cutting the COVID-19 Disaster Payment will provide employers with other clear benefits. Above all, its removal will create an enormous increase in demand for low-wage and insecure jobs, as more unemployed workers are forced onto JobSeeker. This will drive down wages and conditions across the entire labor market.

A Bosses’ Benefit

Back in March 2020, in the early days of the pandemic, the Scott Morrison government abruptly doubled the JobSeeker benefit to $1,100 per fortnight for six months. This meant that for the first time since the mid-1970s, Australia’s unemployment benefit was roughly equivalent to the Henderson Poverty Line. Overnight, the increase lifted three out of four unemployed workers receiving JobSeeker out of poverty.

Employers widely hailed the government’s increased JobSeeker rate and the $90 billion JobKeeper wage subsidy program as clear-sighted policies that would fuel Australia’s COVID recovery. “We applaud the government’s measures to double income assistance making it more flexible,” declared the Business Council of Australia in March 2020.

This was an apparent about-face for employers who had, for decades, opposed any proposal to raise the unemployment benefit to reach the poverty line. However, they understood that even while temporarily lifting many unemployed workers out of poverty, the Coalition had been careful to look out for bosses’ interests.

Traditionally, employers have feared that decent unemployment benefits would put pressure on them to increase wages. Under JobKeeper, however, the government paid wage subsidies directly to employers, allowing many still-profitable businesses to rake in millions more. This mollified their concerns about the boost to JobSeeker payments while allowing them to keep furloughed employees during lockdowns.

In 2021, the situation has changed drastically. In the absence of the now-discontinued JobKeeper gravy train, employers fear that a return to higher benefit payments would undermine Australia’s insecure labor market. They understand that introducing a livable JobSeeker benefit pegged at the poverty line would effectively create a new floor under which wages cannot drop, hobbling the low-wage casual labor market in the process.

Driving Casualization

The alternative, championed by the Coalition and employers, is a return to a punitive social security system that has been propping up Australia’s insecure labor market since the late 1980s.

Encouraged by the Bob Hawke Labor government’s Prices and Incomes Accord, employers launched a concerted campaign demanding a more “flexible” and “competitive” labor market. Above all, bosses wanted the restrictions imposed on casual and insecure employment abolished. By 1988–89, the Labor government began restructuring the awards-determining conditions in different industries. Clauses preventing the use of casual employment started disappearing from awards and workplace agreements, all with the blessing of the ACTU.

Changing the award system was not enough for employers, however. They recognized that most unemployed workers would only accept casual and low-wage jobs if they had no other option. In the late 1980s, the unemployment benefit presented a viable alternative to low-wage casual jobs.

Not only was the benefit set at just below the poverty line during the 1980s, there was far less stigma attached to claiming welfare support and the requirements for doing so weren’t as demanding as they are today. This was a major barrier for the employers’ plan to casualize the labor market.

Predictably, businesses and the Hawke government led a concerted push to introduce a new type of unemployment benefit designed not to support unemployed workers, but to further their industrial relations agenda to “open-up” Australia’s labor market. The unions, for their part, offered little resistance. In its landmark 1987 publication Australia Reconstructed, the Australian Council of Trade Unions (ACTU) had already distanced itself from the Accord’s social wage commitments toward the unemployed.

A Punishing Machine

Between 1987 and 1991, the Hawke Labor government overhauled the unemployment benefit. They built an “active” system which required unemployed workers to attend a range of appointments and activities or face financial penalties. Between 1988 and 1996 the number of financial penalties imposed on unemployed workers increased more than ten-fold, from 12,500 to 113,100.

Naturally, unemployed workers began to look for an escape. Casual and insecure jobs suddenly became far more attractive than they had been before. Between 1985 and 1992, the proportion of workers in insecure employment roughly doubled to nearly a quarter of the labor market.

After winning the 1996 election, Liberal prime minister John Howard intensified the punitive elements of Australia’s unemployment welfare system. Howard introduced Work for the Dole and the Mutual Obligations regime, in which payments were made contingent on obligatory make-work. Howard also froze the level of unemployment benefits and privatized employment services. These measures contributed to another surge in casual work. By 2004, roughly three in ten workers were employed in insecure or casual work.

After winning the 2013 election, Liberal-National Coalition introduced a new round of attacks on the unemployed, including ParentsNext, PaTH, JobActive, and Robodebt. The Coalition also expanded the Cashless Welfare regime, the Targeted Compliance Framework, and the Community Development Program. As a result, in 2018–19 alone the Coalition issued a record 2.7 million financial penalties on unemployed workers.

These attacks helped drive yet another spike in casualization and insecure work. Today, more than 40 percent of the labor force are in casual or insecure work, one of the highest rates in the OECD.

Social (In)security

The pandemic has put the consequences of Australia’s high rate of casualization in stark relief. It will, however, be a difficult fight to reverse the trend. Four decades of casualization has made Australian capital dependent on insecure labor. Employers will fiercely oppose any attempts to undermine the status quo, as demonstrated by their successful year-long legal battle to deny long-term casuals access to paid leave.

Australia’s employers know all too well how important our punitive model of unemployment benefits is to maintaining our insecure labor market. It’s time that the forces opposing insecure work understood this too.