Green Jobs and Skills of the Future

Background

Long overrepresented in unemployment statistics, young Tasmanians have also been disproportionately impacted by the economic fallout of the pandemic. 

Youth unemployment in Tasmania is the highest in the nation, while housing insecurity and homelessness amongst young people living in poverty is also rising.

It is time to provide more opportunities for young people, and better harness their skills to help tackle the big challenges of the future.

Young Tasmanians need a youth job guarantee.

Technological innovation and changes in the global economy are leading to structural changes in Tasmania’s workforce. Depending on the locality, as many as 19%-28% of current jobs in Tasmania could be lost to automation by 2030.[1]

These shifts will add to the pressures Tasmanians are already experiencing. Since the early 1990’s, the rate of insecure work in Australia has been growing.[2] Employment, particularly youth employment, has been negatively impacted by COVID-19.

The current labour force climate is impacting young people the most. Figure 2.3.1 shows the strong influence age has on the unemployment rate.

Figure 2.3.1: Unemployment rate by age group, February 2021[3]

We need to solutions to the shortfalls of the current labor market. The Greens support the introduction of a Job Guarantee program to provide secure, guaranteed work with full entitlements to the unemployed.

Job Guarantee

The principle of a job guarantee is that the program acts as a ‘buffer stock’ to take on workers that the job market is unable to accommodate.[4] A job guarantee is distinct from ‘work for welfare’ programs in that it provides full legal employment entitlements, and it does not form part of any mandatory eligibility program – it is a fully voluntary employment option.[5]

A key component of a job guarantee program is to maintain its status as providing an employment buffer stock, rather than a direct competitor to other employers.

There are few contemporary examples of genuine wide-scale employment guarantee programs, the National Rural Employment Guarantee Act (NREGA) in India is one of them. NREGA guaranteed 100 days of paid employment per year to people in the regions it applied to, this entitlement had no restrictions or eligibility criteria (other than the locational restrictions).[6]

While some criticised the program for driving up wages in the agricultural sector, distorting the labour market, evidence suggests that this only occurred for female workers, and that tis likely occurred due to a history of female employees being paid less than their legal entitlement in the sector.[7]

Tasmanian Employment Office

 

We will establish the Tasmanian Employment Office in two phases. Phase 1 will focus on the development of Job Guarantee programs and partnerships. Phase 2 will involve rolling-out the Job Guarantee program.

Figure 2.3.2 shows the high variance in the potential cost of a job guarantee program. The table examines costs against three uptake scenarios – low (66% unemployed), moderate (80% unemployed and 20% underemployed) and high (100% unemployed and underemployed). The table also examines a low cost (living wage[8] +30%), moderate cost (average of living wage and average wage, +30%), and high cost (average wage[9],[10] +30%).

Cost potentials for a 16 hour / week program for 15-24 year-olds range between $80 million and $550 million per year, and a full 40 hours per week program for 15+ year-olds ranges from half a billion dollars to four billion dollars per year. Tasmania’s General Government Sector revenue was $6.4 billion in 2020-21.[11]

Figure 2.3.2: Cost scenarios for Job Guarantee

15-24 Year-Olds 16 hours per week

($M)

Low Cost ($25.79 / hour)

Moderate Cost ($37.44 / hour)

High Cost ($49.09 / hour)

Low Uptake (3,696)

79.30

115.13

150.95

Moderate Uptake (6,048)

129.77

188.39

247.01

High Uptake (13,440)

288.38

418.65

548.92

15+ Year-Olds 40 hours per week

Low Uptake (3,696)

584.17

848.06

1,111.95

Moderate Uptake (6,048)

955.92

1,387.74

1,819.55

High Uptake (13,440)

2,124.27

3,083.86

4,043.45

This analysis is presuming that the program doesn’t have the effect of pulling young Tasmanians out of the job market, which would compound costs over the years and cause a workforce shortage in sectors that rely on youth labour. This would have significant negative implications for both Tasmania’s economy and state budget.

It is therefor important to control program entrants to ensure that the program acts as a provider of jobs to those who otherwise would not have one. This could be achieved through hard controls, like a strict cap on entrants or strict eligibility criteria relating to unemployment. Hard controls would fundamentally undermine the concept of a program to guarantee jobs to those who want them.

The alternative means of controlling program entrants is to ensure that the program is attractive to unemployed Tasmanians, but relatively unattractive to those who already have employment. This is one of the reasons that Job Guarantee advocates describe the program as a living wage program.[12],[13],[14]

Figure 2.3.3 estimates the costs of a Job Guarantee program for various age groups and weekly hours. The table used the ‘moderate uptake’ scenario referred to in figure 2.3.2. The last labour force survey found 66% of unemployed persons had looked for full-time work.[15] It is cautiously assumed that 80% of unemployed people would take-up the program. It is also assumed 20% of the underemployed would turn to the program for either additional work in an 8- or 16-hour scenario, or an alternative job under a 40-hour scenario.

The assumed average hourly cost is a living wage + 30% on-costs. The estimated costs range from $33.6 million - $956 million per year.

Figure 2.3.3: Cost estimates for Job Guarantee program under various parameters

15-19

15-24

15-29

15-39

15-54

all

Unemployed[16]

2,900

5,600

7,600

10,500

13,400

16,500

Underemployment estimate[17]

4,060

7,840

10,640

14,700

18,760

23,100

Assumed uptake

3,132

6,048

8,208

11,340

14,472

17,820

8-hour week ($m)

33.60

64.89

88.07

121.67

155.28

191.20

16-hour week ($m)

67.21

129.78

176.14

243.34

310.55

382.40

40-hour week ($m)

168.02

324.46

440.34

608.36

776.38

956.00

Figure 2.3.3 shows that a 40-hour per week model would be expensive, and require significant additional resourcing to increase eligibility thresholds. A 40-hour per week model would also have highly volatile costs, ranging between half-a-billion to 2 billion depending on the uptake scenario if applied to all age groups (figure 2.3.2).

On the other hand, the 8-hour per week model would be relatively expensive but offer low benefit to participants.

16-hours per week would be more affordable to the state budget. While it would not offer complete financial security, it would provide a reasonable supplement to two-income household, students, casual or part-time worker, or to a recipient of a Centrelink payment.

This would have the added benefit of providing a similar number of days per year as the NREGA program, which was shown to not have a negative distortionary economic impact.[18]

Youth unemployment is particularly high, currently sitting at 15.4%.[19] Initially targeting a program at youth employment will allow for a controlled assessment, and rollout, of a Job Guarantee program. This would ensure that impacts on the economy, specific industries, and program participants could be fully addressed before wider roll-outs.

Job Guarantee Program

 

We will establish a Job Guarantee Program. The program will offer a guaranteed job for 16-hours a week at a living wage with full entitlements, including superannuation. The program will initially be offered to Tasmanians under the age of 19, and will extend to all age groups by 2030.

We will attempt to secure Commonwealth funding in order to fund the program for employment of up to 40-hours per week.

Jog Guarantee programs typically focus on public works, particularly environmental programs.[20],[21] This ensures public money goes to society productive program, and also diminishes the risk of the program competing with employers, which could risk driving down wages or removing skilled employees from the labour market.

A Job Guarantee program has the potential to fill a range of unmet demand in work for a whole range of sectors, including Local Government and the not-for-profit sectors. However, there is a risk that using the program in this way could cause these sectors to rely on Job Guarantee workers instead of hiring employees – driving down wages and failing to create new employment.

For this reason, the initial Job Guarantee program should establish well-considered ‘streams’ that are designed based on careful consultation with target sectors and experts. Public environmental restoration works and a support workforce for the caring sectors, operating under clear and carefully designed parameters, are immediate priorities.

Job Guarantee Workforce ‘Streams’

 

We will design a limited number of ‘streams’ for the initial rollout of the Job Guarantee workforce. The initial streams will include environmental restoration, as well as a support workforce for the care sectors.

The Future of Work

Automation, the proliferation of insecure work, high unemployment, and increasing demand for skills and qualifications are fundamentally changing our labour market at significant speed. Governments have failed to keep pace with these changes, and to bring forward solutions to decreasing employment security.

A Job Guarantee program will provide an employment safety-net, but will not in itself resolve all of the contemporary challenges our labour market has as we adapt to automation and a changing climate. Governments need continuous and informed advice to tackle the challenges we currently, and increasingly will, face.

Future Work

 

The Tasmanian Employment Office will be tasked with providing ongoing advice on the future of work, and policies to relieve employment insecurity. This will include an examination of moving towards a four-day work week (while retaining current fulltime wages), where and how reskilling efforts need to take place, and future industries that Tasmania should be investing in.

 



[1] McKinsey and Company, Australia’s automation opportunity: Reigniting productivity and inclusive income growth, 2019, p. 16.

[2] Australian Council of Trade Unionsy, Independent Inquiry into Insecure Work in Australia, 2012, p. 17.

[3] Australian Bureau of Statistics, Labour Force, Australia, Detailed, February 2021.

[4] Mitchell, W and Watts, M, A comparison of the macroeconomic consequences of basic income and job guarantee schemes, Centre of Full Employment and Equity, 2004, p. 7.

[5] Ibid.

[6] Azam, M, The Impact of Indian Job Guarantee Scheme on Labor Market Outcomes: Evidence from a Natural Experiment, IZA Discussion Papers, No. 6548, 2012.

[7] Ibid.

[8] Fair Work Ombudsman, Minimum Wages, 2021.

[9] Australian Bureau of Statistics, Employee Earnings and Hours, Australia, cat. 6306.0, 2019. (Average weekly hours)

[10] Australian Bureau of Statistics, Average Weekly Earnings, Australia, cat. 6302.0, 2021. (Average weekly income)

[11] Tasmanian Government, Budget Paper Number 1, 2020-21 Tasmanian Budget, 2020.

[12] Pearsons, N, Talking Point: Tasmanians deserve a job guarantee, The Mercury, 2020.

[13] Australian Unemployed Workers Union, Job Guarantee, n.d.

[14] Mitchell, W and Watts, M, A comparison of the macroeconomic consequences of basic income and job guarantee schemes, Centre of Full Employment and Equity, 2004, p. 7.

[15] Australian Bureau of Statistics, Labour Force, Australia, Detailed, February 2021.

[16] Australian Bureau of Statistics, Labour Force, Australia, Detailed, February 2021.

[17] Australian Bureau of Statistics, Labour Force, Australia, cat. 6202.0, March 2021. (Note: underemployment is not produced by age, the rate of underemployment to employment is applied to estimate underemployment rates for each age group)

[18] Azam, M, The Impact of Indian Job Guarantee Scheme on Labor Market Outcomes: Evidence from a Natural Experiment, IZA Discussion Papers, No. 6548, 2012.

[19] Australian Bureau of Statistics, Labour Force, Australia, Detailed, February 2021.

[20] Azam, M, The Impact of Indian Job Guarantee Scheme on Labor Market Outcomes: Evidence from a Natural Experiment, IZA Discussion Papers, No. 6548, 2012.

[21] Mitchell, W and Watts, M, A comparison of the macroeconomic consequences of basic income and job guarantee schemes, Centre of Full Employment and Equity, 2004, p. 8.