From the back-room to Troppo: Backroom girl blogs on Poverty

 

You can tell this is the good Peter Saunders because he looks like Santa Claus …

Somewhat by accident, (happy accident though it is) Troppo seems to have become a place for really excellent policy discussions about welfare, the labour market, inequality and poverty with contributions from around the world from experts. Fred Argy mentioned how good some of the contributions were and what a pity they risked being lost in the comments. As a consequence I emailed some of the contributors inviting them to post here should they wish.Within hours . . . Backroom Girl’s first post. Thanks BG.

It’s a tricky thing, this poverty business

In today’s papers, Ross Gittins reports on recent research (pdf) by the SPRC Peter Saunders (in conjunction with various well-known welfare agencies) that attempts to redefine poverty by reference to whether people can afford a variety of items commonly regarded as ‘essential’.

The researchers think (and Ross seems to agree) that this is a more fool and argument-proof method of working out whether people are poor than just looking at how much income they have. It is also supposed to get away from sterile academic arguments about how poverty should be defined and measured, topics on which consensus is apparently impossible.

Saunders and his fellow researchers first asked a random selection of the population what they regarded as essentials of life. The same survey was then given to a group of welfare agency clients, who by and large agreed with the general population on which items were most essential. To quote the SPRC directly:

Results for both surveys show that the basics of life secure housing, warm clothes, a substantial meal and being able to buy prescribed medicines rank at the top of the list of essentials “¦. above owning things like a telephone, washing machine, TV or even a car.

The welfare clients who were surveyed were also asked which of the items on the list they missed out on because of lack of money. This gave some results that I don’t find surprising (half couldn’t afford dental treatment and 60 per cent didn’t have $500 in savings), but others that are more concerning. For example, about a quarter said they couldn’t afford prescribed medicines, while one in eight couldn’t afford a substantial meal each day and a similar proportion couldn’t afford heating.

It is one thing to agree that conceptually poverty is about whether people are able to afford what we as a society believe are the essentials of life. However, it is quite another to determine whether the reason somebody doesn’t have such an essential is because they don’t have enough money. (See it still comes back to money.)

You would think that if people believe that eating a proper meal every day, having a roof over their heads and buying essential medicines are the most important ‘essentials of life’, then they would give those things priority and miss out on something else. What are we to make of the fact that many people apparently prefer to spend their money on things they regard as less than essential? Is it another case of so-called first order preferences trumping second order preferences (or have I got that the wrong way around?)

From what I’ve seen of this research so far, I’m not sure that its findings will be any less contestable than those from the traditional income-based poverty research. At least with income it is possible to agree that there is some level below which normal human functioning is difficult to sustain no matter how frugal you are. But I don’t see how you can go down this relative deprivation route without having to address the thorny old issues of behavioural poverty (such as the fact that, according to the ABS, income support recipient households spend on average 10 per cent of their money on alcohol and tobacco, more than half what they spend on food).

There will be lots of other things for academics and others to argue about in this research, including whether it is at all appropriate to label something as essential if only 50 per cent of the population thinks it is. But perhaps that is a topic for another day.

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Robert
Robert
15 years ago

Just adding a salute to Troppo for embracing this issue. Bring it on! And for what it’s worth, as an Australian issue I believe it may rise up from being the sleeper it is, one fine day. May your exploration of it travel far and wide.

Ken Parish
Admin
15 years ago

Apart from the smokes (which I gather now cost more than 10 bucks a packet even for cheap ones) and the fact that far more welfare recipients seem to smoke than is the case for the affluent middle class (that’s a subjective observation – are there any statistics on it?), one of the more remarkable things I noticed when working in the field in NSW for a short time in the late 1970s, was that just about all welfare clients were in HP hock up to their eyeballs to Waltons or some similar easy credit provider. And they all had colour TVs, video recorders and nasty ugly vinyl lounge and dining suites that they’d bought brand new on HP. They would come into the welfare office or Vinnies most fortnights for food vouchers to feed the kids after the smokes and the Waltons payments had gobbled up their pension cheques. Meanwhile, I had just bought my first house, and much of my fairly meagre salary went on mortgage payments and renovation costs, while I furnished the place with second hand stuff purchased cheap at garage sales and made do with a black and white TV and certainly no video .. shoe box in the middle of the road … pay the mill owner for permission to come to work … tell that to the kids of today and they won’t believe it … I have to confess I did smoke in those days though.

Christine
Christine
14 years ago

Ken, surely you had to walk to school/work through the deep snow / burning summer heat with cardboard covering the holes in your shoes too?

Seriously, the HP (delayed payment?) sound really good at first glance. It’s only when you do the interest rate calculations that you figure out they’re a disaster. I suspect that there are a large % of welfare recipients who can’t do that calculation, though. As for cigarette consumption, the negative correlation with income is fairly well known, isn’t it? A more interesting question might be whether welfare recipients smoke more than similar non-recipients.

One thing that discussions of welfare always bring into the picture is the deserving poor vs undeserving poor issue. My impression is that Australia is less judgemental on this stuff than Canada (where I’m living at the moemnt, and where welfare is run at the provincial level, and there are different Acts covering the deserving and non-deserving poor). I wonder whether using the consumption approach might provide another dimension on which to argue people are not deserving (not only do these bludgers not get out and get a job, but they’re spending all the money we give them on cigarettes! Cut them off!).

In Canada, there’s some work done by Christopher Sarlo, associated with the Fraser Institute, that measures the income required to purchase the “essentials”. His list of essentials seems pretty grim to me, and unsurprisingly his income measure ends up being way lower than the Low Income Cut Offs calculated by StatCan (NB: not a poverty line, according to StatCan), or the 1/2 of median income figure.

Peter Whiteford
Peter Whiteford
14 years ago

There is a distinction between the average amount people as a group spend, and the proportion of the group who participate in the spending. You need to look at the unit record data to determine this.

My memory from looking at an older household expenditure survey is that broadly similar percentages of people smoke across all income groups (it is addictive after all) but that a higher proportion of higher income groups spend money on alcohol. I also recall that lower income groups were relatively more likely to have pets.

I have seen more recent newspaper reports which draw the same distinction for the indigenous population – a subgroup drink rather a lot, but actually a higher proportion than the general population never drink at all.

My own view on the poverty line is that the idea that there is one right answer – “the holy grail” – gets us into trouble, so what you need to do is to take a lot of different approaches (which I won’t go into now) and look at the differences and similarities between results.

Andrew Norton
Andrew Norton
14 years ago

“My memory from looking at an older household expenditure survey is that broadly similar percentages of people smoke across all income groups (it is addictive after all)”

A rare case in which Peter is wrong. The lowest SES group is more than twice as likely to smoke as the highest.

This goes to a point that others have made, that it is getting harder to narrow health inequalities because some health improvements require attributes (such as self-control) or skills (such as understanding medications) more likely to be found in higher than lower SES groups.

Fred Argy
Fred Argy
14 years ago

It appears from the work of Peter Saunders that we do have pockets of ‘absolute’ poverty in Australia and we should stop pretending it doesn’t exist.

Absolute poverty among people of working age has three distinct causes: inadeqyuate employment opportunities, low earning ability and individual choice (what Background Girl calls behavioural poverty).

If the problem is inadequate employment opportunities (mismatch in the labour market, we should be trying to address the root causes through education, training, mobility incentives, targeted wage subsidies, better access to services like public transport, early child intervention etc. (what I have called ‘equal opportunity’ policies).

If the problem is low earning ability (where training can offer little hope), we should be ensuring through earned income credits, family payments and other social benefits that these people can maintain a decent life.

If the problem is behavioural (and I believe this applies to a minority), case by case management and counseling is needed, combined with some ‘stick’ in the administration of welfare where young people are involved.

We know what needs to be done but the debate has become too ideological.

Robert
Robert
14 years ago

Fred, from what you’re saying, to assist people suffering from poverty, effectively energy or input is required? Correct me if I’m wrong here, or please elucidate. That is to say, the people suffering are not likely to assist themselves?

If so, this would throw up a whole bunch of unattractive issues to deal with. As Christine mentions: do they deserve assistance or not? Who decides that? And from the sufferer’s perspective, what’s it like? Aren’t there effectively two worlds here – one for those who have achieved (for want of a better term), and the world for those who suffer?

Pehaps the sufferer looks out upon the world with patterns of thought and behaviour which, to them, are entirely justified. “I may as well smoke – it’s something I can enjoy, it’s mine, and life or I’m stuffed anyway” – not knowing any different.
And perhaps to them, too, assistance is met with as an attack on what little pride they have?

To an achiever, or non-sufferer, equally, are they not fully entitled to feel justified for the personal effort they’ve put in, the sacrifices they’ve made, and the decisions they’ve backed themselves with? Why are they not entitled to say “I can do it, so can you,”?

How do these two worlds meet?

Coming back to the original point: if energy or input is needed from outside of the poverty sufferer’s ken, what is required from the sufferer in order to change? “You have to want to change” is not a cliche joke. So where does the first step start for the sufferer?

Surely this matter is bedded deep within the human psyche, within our societal attitude, within governmental policy and vision for who and what humanity is, and cuts to the very core of how the human condition is improved.

I would be interested to see if there’s agreement here on that point: that energy or input is required from “outside”, as, say, a start.

derrida derider
derrida derider
14 years ago

I used to be a bit of a fan of “relative deprivation” approaches, until on reading a questionnaire that asked “Have you missed a meal in the last month due to lack of money?” I recalled how many meals I’d missed as a youth in order to spend my money on higher priorities – eg recreational drugs (legal and illegal), parties and (more creditably) books.

Fred, the practical problem in your approach, and indeed of the whole “deserving and “undeserving” poor approach, is that you can’t tell which category they fall into by looking at them – certainly not by looking at them in a welfare office. Apart from anything else, the categorisation gives people powerful incentives to simulate being in one partiular category or another. And anyway, as Henry Higgins noted, the undeserving poor need just as much money – pehaps more – than the deserving poor in order to live.

In eight years in a welfare office I only ever saw dumb and/or honest people have their unemployment benefit sanctioned. It converted me to a lifelong supporter of an unconditional basic income.

Tony Healy
Tony Healy
14 years ago

Ken, those examples of low-income people being screwed by credit providers are actually similar to your own case of Crikey deliberately exploiting you to obtain a valuable article on East Timor.

In your case, Crikey refrained from explaining the options to be paid, and also pretended that a marketing gimmick a – free 3 month subscription – was payment. Since Crikey is now a managed investment, that behaviour would have resulted from deliberate decisions aimed at reducing labour cost. That’s what’s obnoxius about it, by the way.

In the same way your naivity about media was exploited, the naivity of low-income people about money management is deliberately exploited by a range of nasty and big credit providers, with the results you apparently saw. Their meagre income is squandered on irrelevant goods and exorbitant fees to smartarses in nice suits.

Proper management of credit provision would be a useful tool in managing poverty, along with restrictions on poker machines.

backroom girl
backroom girl
14 years ago

Thank you all for responding to my inaugural blog post

backroom girl
backroom girl
14 years ago

In interpreting all of this it is also important to remember that the welfare recipients surveyed were clients of the various welfare agencies involved in this study (Mission Australia, Brotherhood of St Laurence, Anglicare). This means that they are not a particularly representative sample of low-income Australians, but are in fact the people who you would expect to be most likely to report missing out on essentials.

So from that point of view, if only one in eight report regularly missing meals that might be quite a good outcome. It also suggests that if such a relative deprivation study were rolled out to the whole population, we might observe quite low levels of deprivation as long as the list of essentials is not too long and all-encompassing (and as long as people were not considered deprived if they missed out on only one thing on the list).

Which brings me your point, Fred, about where all this takes us in policy terms. Taking your three different causes of ‘poverty’ (employment opportunities, earning capacity and behavioural problems), I would be interested to see whether the researchers are game to test which of these is most likely to be associated with relative deprivation. (I think you could probably guess which one I would be betting on, but we will never know if people choose not to ask the question because they are afraid of the answer.)

Link
14 years ago

Take it from someone who knows and who in the last six or so months has not been able to afford to eat three meals a day. Fortunately for me, like Ken, and probably anyone reading this, I have an education and I’m relatively cluey. I know when I’m being sold down the river by advertisers, or allowing myself to be pressured by peers. Sadly, however, many people, who get sucked into the old H.P. or who live on credit, believe that having ‘stuff’ will make them appear, even if only to themselves, upwardly moving and ‘affluent’ like everyone else (is trying to appear).

Human are perverse and by and large in the west, unhappy and more often than not, rich or poor, disatisfied with all that we have. We are spoilt rotten–literally. Unhappiness leads to all sorts of otherwise irrational behaviours, like smoking, taking drugs and frittering away limited resources on the acquisition of things we do not need or even more stupidly but understandably, trying to make more moeny through gambling in the vain and grim hope of a short-term happines fix and the approval of society.

There are many, many, people in Australian society who like me, have gone and are going without meals living a hand-to-mouth existance but most of these peole would never, never admit to it as there is a growing band of aspirational people these days have who simply have no respect for people with little or no money.

In my case to live like this, or to have lived like this, didn’t actually make me feel poverty-stricken as in many ways I am rich without compare and I am eternally grateful for that and for the experiences I have had because I have been poor.

It doesn’t matter how much fucking money you have, ‘normal human functioning’ is hard to sustain. Education is the key.

Fred Argy
Fred Argy
14 years ago

My guess is that while some 10% or more of Australians fall below the Melbourne Institute poverty line, absolute poverty (relative deprivation) may amount to 4 to 5% of the population. They are in the two lowest income deciles and according to NATSEM, their incomes have been slipping relative to average earnings.

Backroom girl, you ask which of my three categories is most likely to be associated with relative deprivation. I don’t do hard new research these days (perhaps someone from Family and Community Services can help) but let me have a go at breaking up the numbers of working age Australians who suffer deprivation of one sort or another (I leave out students living away from home and carers, who find it hard to live on their various allowances).

1. People with low earning capacity.

Unlike their counterparts in the USA, adult Australians who can work full-time or close to it but have low earning capacity are protected by a decent minimum wage and should not suffer greatly from deprivation. These people are doing it very tough (and feature among NATSEM’s ‘relative poor’) and need better education but real deprivation seems unlikely if they manage their budgets properly.

The exception is where they are being illegally under-paid by employers (and we know this happens with many newly arrived migrants). And there are some teenagers who are being paid trainee or youth wages and living away from home who may also occasionally suffer from deprivation even if they work a full week.

But, having said that, I accept that probably less that 10% of the people suffering from deprivation might fall into the category of people working full-time but with low-earning capacity. The numbers may increase if employers gradually reduce effective take-home pay for vulnerable workers (as seems to be happening).

2. People who are structurally under-employed

The big category is the under-employed who are jobless or only work intermittently over the year. We can safely say that those on Parenting Payments and Disability Pensions should be able to avoid deprivation (although not ‘relative poverty’ as usually defined) as the benefits they receive are reasonable. But there are many Australians forced to rely on New Start allowance (and these numbers seem set to increase because of the recent welfare measures) who are keen to work but live in the places where there are few jobs they can fill because they are devoid of skills and aptitudes required .

This is my ’employment opportunities’ category and my guess is these people account for another 60% of the people suffering from deprivation. The answer is to invest more resources into bringing them into the job market and in the meantime (especially if they are renting and ineligible for family payments) beef up New Start allowance, which has been steadily falling relative to median earnings and is below the Melbourne Institute poverty line.

Deprivation by choice

This leaves 30% of people who suffer deprivation ‘by choice’. But let’s be careful here. There may be a few bludgers or loafers among them but they can’t survive for long under our very tough work tests and in any case all the surveys show that people on the dole are very unhappy (don’t like their work exclusion).

The 30% is made up mostly of people with mental, drug or personality problems who feel they are not able to work but are adjudged differently by Centrelink and are often penalized (with payments cut off for eight weeks). They need personal counseling and while there should be disciplinary measures they need to be less harsh.

So there you are: 10, 60 and 30%. It’s all very judgmental of course. But someone in the Public Service should be trying to sort them out.

Patrick
Patrick
14 years ago

To go slightly off-track for a second, perhaps we should redesign the school curriculum entirely around:

compassion

responsibility

financial literacy

communication

history

NB that only one of these areas is a traditionally scholastic area, the first four are amongst those things that might reasonably have been expected to be taught/instilled/absorbed by osmosis at home (with the appropriate caveats re communication). Today they are probably, in my humble opinion, significant contributors to ‘class’ immobility and some of the competency problems you guys have identified.

This might help increase ‘capacity’ or general competence without decreasing (much) the scope for individual choice (and the scope for individual harm from individual choice).

David Rubie
David Rubie
14 years ago

Andrew Norton wrote:

A rare case in which Peter is wrong. The lowest SES group is more than twice as likely to smoke as the highest.

Family effects feature strongly in this correlation. Addiction to nicotine has been linked to genetics (see this.)

derrida derrider wrote:

In eight years in a welfare office I only ever saw dumb and/or honest people have their unemployment benefit sanctioned. It converted me to a lifelong supporter of an unconditional basic income.

It appears that in our social democracy, we’ve hit a point where there is a rump of people who quite literally can’t respond to either gifts or cajoling to lift them out of poverty. It isn’t that they don’t want help, just that they cannot use it. Berating them seems completely counter productive, especially where there are children involved. Attempting to sort people into “deserving” and “undeserving” will be so fraught with subjectivity that it requires a lot of caution before we implemented a policy around it.

Andrew Norton
Andrew Norton
14 years ago

David, Are you saying that the poor are genetically different?

David Rubie
David Rubie
14 years ago

Not genetically different Andrew, merely pointing out that there might be other causes other than the one you alluded to (i.e. lack of self control or skills).

The assumption is everybody wants to be out of poverty, and having seen a bit of it, I don’t think that’s true. I wouldn’t say they are lazy or unskilled in the derogatory sense it is usually applied, I would say that they mind it a lot less than you or I would. In the same way, quitting cigarettes for somebody genetically wired to have an addiction to nicotine could be an unbearable agony compared to not having the gene.

Obviously some of the behaviours we see in the inter-generational poor in rich countries are learned, but at this stage of our development, some are inevitably going to be inherited and it’s an area which hasn’t been fully investigated.

The blithe dismissal of the poor as unskilled and lazy is a mis-characterisation. Perhaps some prefer to live that way, some don’t know any better and a few of them are getting enough comforts to not bother trying to improve. I know this is usually used as an argument against social security schemes, but I think it proves we need at least some safety net if we are to continue using the market and property ownership as the basis of society. Some people won’t fit, will never fit, and lavishing them with gifts or beating them with sticks won’t change it. Somebody else will suggest we abandon social security and drop the minimum wage and these people will have to work, but they’ll be stealing your silverware or just begging in the street instead, which is something I would prefer not to see in a country this rich. I’d prefer to keep buying them off to stay at home.

I think we ought to give enough chances to people to allow them to improve if they want to, and make sure their kids are getting schooled and not starving in the meantime so they present less of an on-going cost in public health. I don’t think we should be actively punishing their kids for their parents behaviours (i.e. public schooling and universally available education are important).

Andrew Norton
Andrew Norton
14 years ago

David, I think it is indeed possible that there is some genetic component to the problems experienced by low SES groups. But people from your side of politics are normally very anxious to reject this possibility, fearing that it will be used as an excuse to do nothing to help them.

SJ
SJ
14 years ago

David Rubie Says:

Obviously some of the behaviours we see in the inter-generational poor in rich countries are learned, but at this stage of our development, some are inevitably going to be inherited and it’s an area which hasn’t been fully investigated.

This I’d agree with, but it’s nowhere near as simple as a genetic predisposition to smoking.

Note that I’m no expert in this field, I just want to go over a few things I remember from reading bits and pieces on the subject a couple of years ago.

– There appears to be a genetic component to some affective disorders: depression, bipolar disorder, anxiety (“panic attacks”)

– Nicotine appears to be effective in controlling, up to a point, the symptoms of these disorders

– It usually requires environmental stress to induce the symptoms, e.g. bullying at school, parental abuse, death of a parent, trouble with the legal system, or later in life, things like pressure at work, loss of a job, death of a child or spouse.

The combination of genetic predisposition and stress can perhaps bring on the addiction.

But where’s the link between smoking and income? Through a link between genetics and income or through a link between income and stress? The later seems more likely to me.

David Rubie
David Rubie
14 years ago

Andrew Norton said:

David, I think it is indeed possible that there is some genetic component to the problems experienced by low SES groups. But people from your side of politics are normally very anxious to reject this possibility, fearing that it will be used as an excuse to do nothing to help them.

I don’t know that’s entirely true about the left (it’s an easy generalisation though). What I do think is that we’ve had many years of progress in the west, and we’ve seen most of the standard approaches in rich societies to poverty all fail. I’m in no way suggesting that we genetically profile people or write them off, but we should ultimately come to the understanding that the mixed market model we are using simply doesn’t suit a small minority of people. That is inevitably going to include a lot of different causes. I know the attitude is out of step with the traditional left, but I don’t think it’s out of step with the ideals of the left either.

Both sides of politics need to recognise that we don’t know how to help them. Part of this is our ignorance, the educated and successful have little idea what it’s like not to be in a society that puts few barriers in this path. We all seem to have a general understanding that there will always be criminals, why not poverty? Overall, I think the socially left ended up accomplishing just about everything they set out to do, and now we have edge tinkering. It’s long overdue to let a few of the failed policies wither and try something different.

SJ,

The whole nicotine/smoking thing was one of the examples raised to show that all those nasty poor people do is waste their overly generous welfare on bad habits and sloth. The link to genetics was only brought in to show that there might be some other factors at work. We all have our prejudices (why do rich stockbrokers waste all their money on cocaine instead of charity? etc.)

SJ
SJ
14 years ago

David Rubie Says:

The link to genetics was only brought in to show that there might be some other factors at work.

Well, yes, I understand that, and I happen to agree with you, as I said earlier. It’s the causality that’s difficult.

Why does the graph in ABS 4831.0.55.001 show what it does? I don’t know. I don’t believe it shows that low SES groups are undeserving of assistance because of what they spend money on. Maybe it’s just telling us that “sin” taxes don’t work.

David Rubie
David Rubie
14 years ago

SJ wrote:

Maybe it’s just telling us that “sin”

Peter Whiteford
Peter Whiteford
14 years ago

To know whether sin taxes work we would need to know what consumption would be in the absence of the taxes. I can’t think of a study that has done this, but if anybody else knows of one …

I think that worrying about whether people are deserving or undeserving doesn’t really get us clarity on what to do about poverty. As Hamlet pointed out, if we all got our just deserts, no one would escape whipping.

I suppose that I think – without much in the way of direct supporting evidence – that most of what gets defined as poverty in Australia and other rich countries is obviously relative (but this doesn’t mean that it isn’t real), and that there is some subset (size unmeasured but potentially knowable) who have really significant problems who may need different forms of assistance – but who also still need money.

Fred Argy
Fred Argy
14 years ago

Great debate you’ve started backroom girl.

I am a little bemused by the discussion between David Rubie and Andrew Norton. Both of you seem to be focused on the people who are poor ‘by choice’ and in the case of Andrew (but not David), implying that a bit more stick will help fix the poverty problem (“It’s long overdue to try something different”

David Rubie
David Rubie
14 years ago

Fred Argy said:

Yet if my estimates are right you are only looking at 30% of the poor and ignoring the rest

and

(a) there an overall shortage of unskilled jobs relative to the numbers of unskilled under-employed (b) this imbalance is particularly acute in some regions and towns and (c) you will never get perfect labour mobility (occupational and geographical).

Fred, how do you account for the massive numbers of missing shearers and roustabouts on the farms of Western Australia? Every cocky says the same thing: “gone mining, can’t get shearers, can’t get workers”. That to me is labour mobility. There are towns in western NSW that are practically dead that 10 years ago were full of station hands. There is a shortage of skilled trainers for those kinds of jobs, that I would agree with. But getting workers is proving very difficult for some sectors of the economy (it would help if they payed more, but droughts tend to knock even the richest cockies around). We can’t discount the drought for some of the losses of opportunity, but there are plenty of jobs going begging even in drought affected NSW.

Occupational mobility – well, we need to start giving employers a kick up the backside instead of them relying on poaching workers from more generous firms, or relying on workers supplying their own qualifications. Trade unions could play an important role in this area in the same way that they supply health and safety training. Cost recovery could come from placement services.

As to the nature versus nurture debate, it is rather meaningless.

I’m not sure I agree with that at all. I think it’s important to avoid situations where we are categorising people by their genetics (for example) but to avoid studying it we may miss an important opportunity. I think it’s very important in the quest to “help those who cannot help themselves” – currently we don’t know what the help is we should be providing, and I’m damned if we should give up just because it’s hard.

Fred Argy
Fred Argy
14 years ago

David and Nicholas, I was very careful to say that there was an “overall” shortage of unskilled jobs relative to supply. This is evident in national vacancies to job seekers ratios. Again, studies of the low male participation rate in Australia find that the ‘outsiders’ are almost entirely unskilled (often mature age) workers. The fact is that over the last decade or so, most of the labour demand growth has been in jobs requiring technical, analytical and managerial skills – yet there has not been a corresponding response on the supply side.

This is the overall picture. Of course I am well aware that there are many areas such as inner Sydney, Canberra, mining towns etc. where there is excess demand for unskilled workers. But most of the unskilled workers do not live in these areas and generally cannot afford to move to them (especially if the jobs are potentially insecure). Where they live (in outer suburban, regional and remote areas) they find it hard to get as much work as they want.

Clearly there is a structural imbalance in the labour market – occupational, skill-wise and spatial – and it requires an active government role to fix it. I believe the Howard Government is starting to recognise this and has taken many useful initiatives recently.

I am not denying that there are many jobless or under-employed unskilled workers who lack motivation or a work ethic. But please let us not generalise from the particular to the general.

For the most part, the low participation rate is a result of (a) structural imbalance and (b) personal characteristics on the supply side (such as mental, drug or alcohol problems) which do not respond well to the welfare stick.

I am sorry but we must agree to disagree.

David Rubie
David Rubie
14 years ago

Fred Argy said:

For the most part, the low participation rate is a result of (a) structural imbalance and (b) personal characteristics on the supply side (such as mental, drug or alcohol problems) which do not respond well to the welfare stick.

I don’t think any of us argued that the unemployed weren’t responding to getting beaten with sticks to make them work. What I find most interesting about the situation is that skilled workers are getting pulled into the mining boom (skilled in this case not necessarily formally qualified, but with years of experience i.e. stockhands, shearing teams etc.) Perhaps these workers are far more comfortable with travelling for work and as a result have far fewer ties into their communities.

I’d like to see some statistics on the growth of the service economy vs. the long term unemployed. I would have thought people with mental or drug and alcohol problems were uniquely unsuited to any customer facing position. Anybody who presents poorly to an interview (and especially older men) are not going to be welcomed into this fold. Is this what you mean by structural problems i.e. we are creating jobs in areas that simply don’t suit the unemployed we have available? I’m not sure how we’re going to magically create (say) manufacturing jobs that might suit them better. Those semi-skilled positions where you used to learn on the job and never spoke to a customer have all been exported to China.

How many people are going to give up their $40 DVD players so we can have a go at finding meaningful employment for these guys? I suspect we’re all a bit selfish to do it, especially if we’re able to take advantage of the employment situtation at the moment.

SJ
SJ
14 years ago

Clearly there is a structural imbalance in the labour market – occupational, skill-wise and spatial – and it requires an active government role to fix it. I believe the Howard Government is starting to recognise this and has taken many useful initiatives recently.

Initatives like what? Workchoices certainly doesn’t address any of those issues.

Fred Argy
Fred Argy
14 years ago

SJ, I do not have the details in front of me but the “useful” Howard Government initiatives which I had in mind are: the additional financial incentives to re-locate to areas of high labour demand; the increase in the training component of work for the dole; the increased investment in training; and the extension of the tax offset.

Having said that, I agree with you that Workchoices does nothing to address the issues of concern to me (apart from adding a little more downward wage cost flexibility and making things tougher for welfare recipients).

Manos
14 years ago

Nice

Thrasyvoulos
14 years ago

Nice!